U.S. Trade Representative Jamieson Greer confirmed on Thursday that American businesses are persistently offshoring operations to Mexico, a trend continuing despite the revamped regional trade pact that was specifically designed to stymie such activity. The U.S.-Mexico-Canada Agreement (USMCA), which facilitates duty-free entry for qualifying Mexican goods into the U.S., is presently under review. Greer announced that the product rules of origin, foundational to the agreement, will form the primary focus of discussions during upcoming talks in Mexico next week, as part of efforts to enhance the deal’s efficacy.
Speaking at a congressional budget hearing, Greer explicitly stated, “There is continued offshoring to Mexico.” He disclosed his plans to meet with Mexico’s Economy Minister Marcelo Ebrard for a second round of talks, where he intends to press for changes to these rules of origin. Greer underscored that amending these regulations is essential to combat “transshipment,” a method by which some exporters circumvent higher U.S. tariffs by diverting goods through countries like Mexico, capitalising on their comparatively low tariff rates on U.S. exports.
Greer further elaborated on the need for a comprehensive strategy, stressing the importance of combining tougher rules with appropriate tariff levels to ensure compliance. “If our outside tariff level is low, people will just say I don’t care about the rules, I’ll just bring something in from Vietnam,” he explained. Consequently, Greer is pushing for higher tariffs on goods from the “rest of the world” to genuinely incentivise manufacturing within the United States. This dual approach aims to make it considerably tougher to bypass U.S. tariffs and actively encourage domestic production and adherence to trade agreements.
