Trump Meeting With Mexico President Seen as Chance to Boost Reshoring, USMCA Enforcement

With the USMCA in effect, U.S. and Mexican companies will closely monitor a July 8 meeting between President Donald Trump and Mexican President Andres Manuel Lopez Obrador, which is expected to feature talks on USMCA implementation and trade cooperation, experts said. Industry hopes the meeting -- Lopez Obrador’s first visit with Trump -- helps to strengthen the two countries’ commitment to USMCA and underscores attempts to reshore supply chains, reducing dependency on trade with China, the experts said.

“A lot is at stake in this” meeting,” Ed Royce, an advisory member at the Atlantic Council and former chair of the House Foreign Affairs Committee, said during a July 7 webinar hosted by the think tank. Mexico will insist on making USMCA the meeting's featured topic, said Juan Carlos Baker Pineda, CEO of a Mexican business management consultant company and Mexico’s former undersecretary for foreign trade. “This represents a message to the U.S. business community that, despite any beliefs that people may have had about the Lopez Obrador administration, that administration will get the USMCA enforced,” Pineda said. “That is very important in terms of improving Mexico's confidence in the business environment.”

The two sides should focus on capitalizing on opportunities presented by USMCA, including pushing for a “massive transfer of industrial production” from China to Mexico (see 2006300065), Royce said. This will help reduce risks of intellectual property thefts associated with U.S. exports to China and help lower costs of shipments because of Mexico’s proximity. “The realization, on the part of the United States, that we've not diversified our supply chain leaves us with Mexico as our primary focus,” Royce said, calling the reshoring of supply chains a “groundbreaking” opportunity for a “paradigm shift.”

Although the reshoring of supply chains and the USMCA will benefit both countries, Mexico will be the “primary beneficiary” of U.S. supply chains leaving China, Royce said, which the U.S. administration should stress in its meeting with Lopez Obrador. “It’s going to be less expensive and with far less risk than doing business with China,” he said. “We couldn't be dependent on China, but we can on Mexico … and that's why this visit is so important.”

Jason Marczak, a Latin American expert at the Atlantic Council, said he hopes the talks stay centered on USMCA and are not sidetracked by Trump’s stance on immigration and a U.S.-Mexico border wall. He said that would “derail this historic opportunity to provide commercial certainty to the two countries.”