Mexico, often viewed as dependent on the US, holds a significant edge in the global economy, with the US relying more on Mexico than most Americans realize. Beyond avocados and automobiles, Mexico is a vital hub for US supply chains in electronics, pharmaceuticals, automotive, aerospace, medical devices, textiles, consumer goods, and information/communications technology. As the US depends on Mexico, Mexico has strategically built leverage, shifting focus from politics to economics.
Mexico’s rise as an
economic powerhouse challenges its subordinate image. Its leverage in
trade, energy, and geopolitics makes it vital to the US. Rising labor
and environmental demands could disrupt supply chains. The era of US dominance is fading, replaced by interdependence, and Mexico wields unprecedented influence. A
fracture in this delicate relationship could swiftly impact the US.
Mexico, once a trade partner, is now a force reshaping trade and energy
policies, catching the US unprepared. The US has long focused on
migration and border security, overlooking intricate economic ties.
Mexico is a cornerstone of US production, driven by cost-effective labor
and trade agreements like the United States-Mexico-Canada Agreement (USMCA, 2020).
This dependency
stems from lower wages and proximity, but this corporate strategy has
created vulnerabilities. US companies’ reliance on Mexico’s
manufacturing gives Mexico significant leverage. The North American Free Trade Agreement (NAFTA,1994) boosted
trade but moved US factories to Mexico for cheaper labor, eroding
American jobs. USMCA preserved this structure. Mexico, no
longer just a low-cost hub, has diversified into energy, consumer
markets, and geopolitics, prioritizing labor rights and domestic growth,
threatening the cheap labor model and US supply chains.
US policies, like
subsidized agricultural exports, have displaced Mexican farmers, driving
migration. US firms’ job relocation to Mexico exploits low-wage
workers, creating an underclass on both sides of the border, with
migration as a symptom of economic disparities.
Mexico, a key US oil supplier, is asserting control over its energy resources, nationalizing and tightening oversight, challenging US corporations. Its push into renewables diversifies its portfolio, enhancing global leverage. Prioritizing domestic energy could disrupt US imports, forcing a strategic shift.
Mexico has surpassed China as the top US trade partner.
militarily occupy Mexico and use it as a substitute for China in its economic system. «
Mexican
labor movements demand better wages and conditions, undermining the
cheap labor model, potentially raising US consumer prices. Environmental
activists push for sustainable practices, challenging resource
exploitation.
Amid the US-China trade war, Mexico is a nearshoring hub, benefiting from USMCA and proximity. China’s investments in Mexico create a trade triangulation, with Chinese components assembled in Mexico for US export, bypassing tariffs. Mexico negotiates favorable terms with both powers, gaining strategic autonomy.
Richard D. Wolff, American Marxist economist known for works like "Democracy at Work,"
is teaching at the University of Massachusetts Amherst and The New School.
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