Why China Is Worried About Trump’s Tariffs on Mexico

Officials in Beijing are increasingly worried that President Trump’s tariffs on Mexico may be the start of a broad campaign to force developing countries around the world to choose between trade with the United States or with China.

Ever since Mr. Trump imposed extensive tariffs on goods from China during his first term, companies have been investing heavily in countries like Mexico, Vietnam and Thailand to assemble Chinese components into goods for shipment to the United States. Doing final assembly in these countries offered a back door to the U.S. market regardless of trade frictions between Washington and Beijing.

China’s trade surplus with the United States has shrunk by almost a third since 2018. But Chinese exports to developing countries have skyrocketed. China now sells 11 times as much to Mexico as China buys from it. Those sales include Chinese auto parts assembled in Mexico in cars destined for dealerships in the United States.

The concern now in Beijing is that Washington’s pressure could force Mexico to close its market to Chinese goods in exchange for a reprieve from American tariffs on trade with Mexico. At stake for Mexico, among other things, are the jobs created by its abundant trade with the United States.

Mr. Trump could then use Mexico as a model to demand other countries take sides in the trade war between the United States and China. That would further limit Chinese access to the huge American market by disrupting other routes to the United States.

Because Mr. Trump renegotiated the North American Free Trade Agreement during his first term, very few businesspeople or officials in China expected him to start his second term by threatening steep tariffs on Mexico. Several unique characteristics of the trade and legal arrangements that China has with Mexico mean that China’s indirect access to the American market is particularly at risk during the ongoing confrontation between Mr. Trump and Mexico.