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The writer is President Trump’s senior counsellor for trade and manufacturing
Mexico’s decision last week to impose tariffs of up to 50 per cent on a wide swath of Chinese and other Asian imports is more than a neighbourhood scuffle. It is a major milestone in President Trump’s trade revolution — and in the postwar international trading system itself.
Now, one of America’s closest trading partners is openly aligning its tariff wall with the US to block Beijing’s predatory export machine. Mexico’s Senate has approved new duties on more than 1,400 products, from autos and steel to plastics and textiles, targeting countries like China that lack trade agreements with Mexico.
The message from Mexico City is unmistakable: if you want preferential access to the US-Mexico-Canada region, you can’t be a front door — or a back door — for Chinese dumping.
This is exactly what Trump and his trade team — US trade representative Jamieson Greer, commerce secretary Howard Lutnick, Treasury secretary Scott Bessent and me — have been pressing allies to do.
Trump’s tariffs have already walled off big chunks of the US market from China’s state-subsidised overcapacity. As those flows are squeezed out, Beijing has tried to dump the glut into third markets from Europe and Africa to Brazil and Mexico. Mexico is now saying: not here. Expect Europe to keep moving in the same direction.
Brussels has already piled countervailing duties on top of its base car tariff to slow a flood of subsidised Chinese electric vehicles and is preparing further measures for sectors exposed to overcapacity-driven surges. This includes work on a successor instrument to the EU’s steel safeguard regime and an import-surveillance task force to track potential trade diversion.
As Chinese goods are shut out of the US and face rising resistance in Mexico, Europe becomes the next big target for Beijing. Policymakers in Brussels can either get ahead of that wave with tough border measures or watch their industrial base drown.
None of this would be necessary if China ran something like a normal, balanced economy. Instead, for decades, the Chinese Communist party has pursued classic mercantilism: keep the household share of national income low, keep the safety net relatively threadbare and — despite periodic pledges to rebalance towards consumption — leave families with enough risk that they save defensively rather than spend, so state-directed factories can overproduce and dump the surplus abroad.
The result is a gigantic trade surplus and a “China shock 2.0” rolling through EVs, green tech and basic materials.
The best way for Beijing to escape this tariff vice is not to keep country-hopping its exports around an increasingly fortified global tariff wall, but to finally act like a real people’s republic: build out healthcare, pension and unemployment systems so China’s middle and working classes don’t have to hoard cash for illness and old age.
A stronger safety net would lower China’s sky-high savings rate, boost domestic consumption and shift growth away from brute-force exports. That would be good for Chinese workers — and it would ease the pressure on countries around the world to keep raising tariff walls just to survive China’s dumping and predation.
In the broadest of terms, Mexico’s move shows that Trump’s tariff strategy is no longer an American outlier, but the global template for a tougher, fairer trading order. Trump is leading a wholesale overhaul of a broken system that for decades turned trade into a zero-sum game — with China winning factories, jobs and wealth while the rest of the world absorbed the losses.
The sooner our allies follow Mexico’s lead, the sooner we can turn trade back into a genuine win-win: secure supply chains, rising wages and shared prosperity built on production rather than predation.
