How Mexico Became China’s Trojan Horse in U.S. Trade

The second Trump administration has refocused America’s attention on trade, tariffs, and national security—a conversation long overdue. But while pundits and policymakers wrangle over China’s economic warfare and Mexico’s growing defiance, few are paying attention to the real story hiding in plain sight:​

China and Mexico aren’t just separate trade problems. They are one and the same.

It’s a sleight of hand worthy of a seasoned con artist—and too much of Washington is still staring at the wrong set of cards.​

What’s worse, this is more than massive trade manipulation. It’s a staggering wealth transfer—from American consumers to Mexico and the People’s Republic of China.​

The Escalating Trade Deficit: A Historical Perspective

It’s important to remember that Mexico’s trade surplus is America’s trade deficit. When Mexico runs a surplus, American consumers and businesses send more money abroad than they bring in.

For decades, the imbalance was manageable. Before NAFTA, in 1990, Mexico ran a $1.9 billion trade surplus with the U.S. By the time NAFTA was in full effect in 2000, that number had ballooned to $24.6 billion.

Then things spiraled.

• 2010: The surplus hit $66.3 billion.​
• 2023: It reached $152.5 billion.​
• 2024: It soared to nearly $172 billion.

Today? It projected at $175 billion—closing in on China’s trade surplus with the U.S.

As Victor Davis Hanson recently pointed out:​

It’s mostly due to China evading tariffs on China by sending raw product materials to Mexico—computers, phones, appliances—to be assembled by Mexicans, and then sent under free trade agreements with us, to the benefit of Mexico and China.

The Trojan Horse Strategy: How China Exploits Mexico’s Trade Status

Washington has imposed tariffs on Chinese goods for years to protect American workers. Rather than absorb the costs, Beijing found a highly effective workaround that the media deliberately ignored. Instead of shipping directly to the U.S., China now routes raw materials—electronics, auto parts, appliances—through Mexican factories, exploiting USMCA’s tariff-free advantages. Once assembled, these products enter the U.S. labeled as “Made in Mexico,” bypassing the tariffs meant to protect American industry.

Here’s how the scheme works:

• Chinese firms flood Mexico with raw materials, where they are assembled and rebranded for duty-free shipment into the U.S.
• Mexico profits by using its free-trade status under USMCA while acting as a middleman for Beijing.
• The U.S. takes the hit—American manufacturers can’t compete, while China secures access to the U.S. market without paying a dime in tariffs.

The result? China gets access to U.S. markets without paying tariffs. Mexico profits from assembling cheap Chinese goods while benefiting from a trade agreement to help North American manufacturing.

But this isn’t just a trade loophole. It’s a calculated maneuver letting Beijing exploit the trade system meant to strengthen American industry. Instead of competing on fair terms, China uses Mexico as a pass-through, keeping its supply chains intact while dodging the penalties imposed to protect U.S. jobs. If Washington doesn’t act, this workaround will only expand, giving China even greater leverage over America’s economy—while Mexico keeps cashing the checks.

The Impact on American Industry

This loophole undercuts American industry in three ways:

1. China effectively sidesteps U.S. tariffs by routing its goods through Mexico, where even partial assembly or repackaging can allow products to qualify for preferential trade treatment under USMCA. Instead of manufacturing in China and paying duties, Chinese firms send parts to Mexico, slap on a “Made in Mexico” label, and enter the U.S. freely.​
2. Mexico’s economy benefits at America’s expense. Mexico is now the top trading partner of the U.S., but much of that “Mexican” trade is just a backdoor for Chinese goods.​
3. U.S. workers and businesses take the hit. American factories can’t compete with Chinese supply chains using Mexico as a front.​

Trump’s Tariffs Worked—But Now Mexico Needs to Be Held Accountable

During Trump’s first term, the USMCA helped stop some of the bleeding. But Mexico is exploiting loopholes, and China is taking full advantage.​

If the U.S. doesn’t close this loophole, Mexico will continue growing its trade surplus while China uses it as a Trojan Horse to flood American markets.

What Needs to Happen?

1. End China’s free ride through Mexico. The U.S. must tighten USMCA to prevent Chinese goods from skirting tariffs.​
2. Hold Mexico accountable. If Mexico wants access to U.S. markets, it can’t serve as China’s manufacturing outpost.​
3. Use economic leverage—again. Trump’s tariff threats worked before—they may need to be reinstated if Mexico won’t crack down.

Will America Wake Up?

Donald Trump and his second presidential administration have once again sounded the alarm on trade. The question is: Will Americans listen?

Will they recognize that tariffs, balanced trade, and reinvigorating American industry aren’t just economic policies but matters of national survival? That closing the China-Mexico backdoor is essential for manufacturing and safeguarding America’s wealth, power, and security?

Or will the United States continue enriching a neighbor that hardly acts neighborly—a country that aids illegal migration, shelters cartels, and willingly serves as China’s economic mule?

Will we keep funding a chief geopolitical adversary—one that brazenly exploits Mexico’s proximity and free trade status to funnel American dollars into the coffers of the Chinese Communist Party?

These aren’t hypothetical concerns. They are immediate, existential choices.

And yet, you won’t hear this debate on CNN, MSNBC, or in the editorial pages of The Washington Post.

Instead, the political establishment—on both sides of the aisle—will tell you that trade imbalances don’t matter. That tariffs are bad for business. That open markets and global supply chains are inevitable, unstoppable forces of modern economics.

They’ll hand-wave away Mexico’s skyrocketing trade surplus. They’ll ignore China’s infiltration of North American supply chains. They’ll gloss over the fact that much of what America imports from “Mexico” isn’t Mexican at all—it’s Chinese goods disguised by geography.

Why? Because a weakened America benefits the ruling class.

Because the consultants, global financiers, and Beltway think tanks don’t manufacture anything. They don’t work on the factory floors of Ohio or the shipping yards of Louisiana. They trade influence, not goods.

For them, it’s easy to defend the status quo.

For the average American? That status quo means lower wages, fewer jobs, and a slow, grinding transfer of wealth—from the U.S. middle class to the Chinese Communist Party.

But it doesn’t have to be this way.

The first Trump administration proved that tariffs work, trade can be rebalanced, and America’s economy doesn’t have to be at the mercy of foreign powers.

The only question left is: Will we act?

Or will we keep lining the pockets of a Mexican government that mocks our sovereignty and a Beijing regime that dreams of surpassing us?

The Trojan Horse is already inside the gates. What we do next determines whether America still controls its destiny.

Charlton Allen is an attorney, former chief executive officer, and chief judicial officer of the North Carolina Industrial Commission. He is the founder of the Madison Center for Law & Liberty, Inc., editor of The American Salient, and the host of the Modern Federalist podcast. X: @CharltonAllenNC

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