U.S. Presses Mexico to Curb Chinese Chip Rerouting

Washington’s push for higher North American content in AI hardware targets China’s supply chain flexibility. It is a direct challenge. The U.S. proposal, discussed within USMCA renegotiations, would extend automobile-like rules to AI components. This means at least 75% North American content for duty-free treatment. This move directly targets Chinese efforts to reroute goods through Mexico.

Taiwanese and Korean chipmakers face significant disruption. Mexico’s AI server production relies heavily on components from these Asian markets. Foxconn, with its Mexican facilities supplying U.S. tech firms like Nvidia, stands as a prime example of a company that will be affected. The new rules could increase administrative burdens and product prices for both Asian manufacturers and U.S. technology companies.

The test for this policy is Mexico’s willingness to accept it. Mexico has already raised tariffs on Chinese imports but resists U.S. content requirements. Such demands could neutralize USMCA benefits for Mexico. The U.S. Trade Representative Jamieson Greer stated in July that he would extend rules of origin to strategic sectors. This includes electronics and pharmaceuticals. The outcome will shape North American AI hardware supply chains for years.