What Shall We Do When Mexico Becomes China?

E gos, corn, and cargo.

Those were the three most prominent features of this week’s visit by President Biden and Canadian prime minister Justin Trudeau to President Andrés Manuel López Obrador in Mexico City to strengthen ties and maintain cohesion in the tripartite trade relationship. In between lecturing one another about the need for cleaner energy, the racial sins of the past, and the supposed benefits of GMO-free corn, the three heads of state reaffirmed what we’ve long known: Canada and Mexico are second-rate polities geographically fortunate to be glommed onto the northern and southern borders of the United States, respectively. The U.S., meanwhile, is incapable of making up its mind about how open those borders should be.

As I’ve written in the past, we accept horrors on our border. The political choices are unsatisfactory, so we all tacitly agree to do a self-satisfied nothing and rip on the other side for its obvious delusions that will “ruin the country.”

But what happens when something shakes up the status quo? Say, for instance, if China (and really, most of Southeast Asia) were to become progressively less lucrative and desirable for American business. What then? Well, that’s a question now finding its way into boardrooms. As shipments from across the Pacific to U.S. ports are seeing month-long (or longer) delays, having your merchandise produced in and shipped through Mexico — which takes half that amount of time — is becoming an increasingly appealing option.

As Peter S. Goodman writes for the Times:

Basic geography is a driver for American companies moving business to Mexico. Shipping a container full of goods to the United States from China generally requires a month — a time frame that doubled and tripled during the worst disruptions of the pandemic. Yet factories in Mexico and retailers in the United States can be bridged within two weeks.

“Yeah, sure,” you might say with an eyeroll. “Making something closer to home means it can get to me faster. Incisive observation. Glad National Review found such a brilliant pundit.” Thank you. What’s really noteworthy about this shift, though, is the extent to which corporate America is shifting from seeing Mexican operations as something supplemental to seeing them in a primary role. For instance, in 2022, companies such as “Samsung, Daewoo, Amazon, Dongkuk Steel, Nissan, Jabil, Heineken, Bosch, Alsea, Pirelli, Walmart, The Home Depot,” among others, made significant investments in Mexico, for reasons ranging from regime instability to ethical queasiness to reduced labor costs. How our goods are produced and shipped is a question of billions of dollars flowing through one location or another. The scale of Mexico–U.S. shipping was already staggering, and now it has an upward-pointing arrow.

Goodman contextualizes:

Already, about $800 million worth of products as diverse as auto parts, clothing and avocados pass through Laredo every day. That reality is underscored by the parade of trucks rumbling through, waiting — often for hours — for their chance to cross a bridge spanning the Rio Grande, the murky river dividing Texas from Mexico. . . .

During an event at City Hall last month, local officials celebrated a milestone — data revealing that $27 billion worth of freight moved through Laredo in October, exceeding the flow through the twin ocean ports of Los Angeles and Long Beach, Calif., the primary gateway for American imports.

NR’s Dominic Pino has done meritorious work noting the structural challenges presented by our West Coast ports. Let’s just say that compromised personnel (unions) and infrastructure that consistently punishes transportation and customers is not a recipe for long-term success. So, it’s only natural that more and more goods flow through the southern border, where shipping options are diffuse enough to limit the possibility of regulatory capture by unions.

But increased traffic to our south would almost certainly exacerbate the issue of illegal immigration (at least in the short-term), as opportunities (both economic opportunities and opportunities for illicit transport) expanded. Would our current system hold up? There is very little reason to think it would, and even less reason to think we can make the difficult political compromises necessary to alter it. Whether we’re politically ready or not, change is coming (good change, as far as reducing reliance on Chinese companies and increasing North American wealth).

But, like a Leinenkugel-addled Wisconsinite in an inflated tractor-tire tube on the Flambeau River who missed the parking-lot bank and is inexorably pulled into the rapids, whether we can ride out the resulting chaos is an open question of tremendous import.