Chinese automakers are becoming a major source of tension in North America as the United States, Mexico and Canada approach the July 1 deadline for the renewal of the USMCA trade agreement, the Financial Times reported. The US has effectively closed the market to Chinese cars due to national security and industrial concerns, warning that subsidized cars with a network connection could undermine domestic production and collect confidential data.
Mexico and Canada, however, are taking a more open approach. Mexico has become a major market for Chinese cars, currently accounting for at least one in five cars sold, driven by low prices and high demand in a market where the fleet is aging. Canada has also reopened its doors, allowing the import of 49,000 Chinese electric vehicles at a reduced duty of 6.1% and attracting investments from BYD, Chery, Geely and others. This discrepancy makes it difficult to negotiate an extension of the USMCA agreement, as Washington fears that Mexico or Canada could become "back doors" in the US market. The automotive sector is particularly sensitive, as the North American industry is deeply integrated and provides hundreds of thousands of jobs, especially in Mexico and Canada.
Although BYD insists that any production in Mexico or Canada will be focused exclusively on local markets, American lawmakers continue to call Chinese cars a security threat. This issue highlights how Chinese cars are changing not only car markets, but also trade policies.
