Mexico surpasses Trump threats with $2.7 billion port expansion

(Bloomberg) — Mexico is looking beyond the new Trump administration’s threats of tariffs, betting on a bright future for global goods trade regardless of what steps its northern neighbor and largest partner takes commercial.

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As Donald Trump promises levies of 60% on goods imported from China and 20% on the rest of the world, Mexico is making a substantial investment to more than double the capacity of its main commercial port – a show of confidence in the means that imports and exports will increase. significantly in the years to come.

The 55 billion peso ($2.7 billion) expansion of the navy-run Port of Manzanillo, located in the western Pacific Ocean state of Colima, would propel it into the top 20 container ports in the world. This represents a huge jump from its current position of 53rd in the latest Lloyd’s List rankings and would position it as the busiest in Latin America.

With completion planned for 2030, the expanded port would cover more than 1,800 hectares (4,448 acres) compared to the existing 450 hectares. The additional land and equipment will more than double annual capacity to 10 million 20-foot containers, said retired Adm. Mario Alberto Gasque, director general of Asipona Manzanillo, the Navy’s agency. who manages the installation.

Annual volumes of this level would put Manzanillo on par with the Port of Los Angeles, the United States’ busiest gateway for maritime commerce.

Among the main products the port receives from more than 140 countries are materials for the automobile industry, agricultural products and steel, Gasque said. The public sector will finance around a quarter of the investment, with the private sector financing the rest.

The port has already received written expressions of investment interest from several private companies, including Mexico’s Ferromex, a rail unit of Grupo Mexico Transportes, said Cesar Sandoval, planning director at Asipona Manzanillo.

But ports are increasingly involved in geopolitical tensions. The United States and Canada have both expressed concern that Mexico is becoming a backdoor into North America for China. And U.S. consultancy Rhodium Group said in a report last month that Chinese direct investment in Mexico is six times higher than official statistics show.

An adviser to the Trump transition team even threatened to impose 60% tariffs on goods shipped through Chinese ports in Latin America, a direct challenge to the newly inaugurated Chinese port of Chancay, Peru. this month by President Xi Jinping. The threat could also affect Mexico: China operates several port concessions from Ensenada in the north on the coast of Baja California to Lazaro Cardenas and Veracruz in the south.

But Mexican President Claudia Sheinbaum, who is scheduled to tour the Manzanillo facility on Saturday, insists her government has a plan to replace many of its imports from China with locally made goods from Mexican and foreign companies. . She also strongly opposes American and Canadian criticism.

The idea that China is using Mexico as a back door to the United States “is not correct,” the president said Friday during her daily press briefing. “Automotives made in Mexico, whether exported to the United States or remaining in Mexico, contain only 7% products from China. In the United States, it’s 9%,” Sheinbaum added.

During a Navy-organized tour of Manzanillo port facilities, several Asipona officials said they were not concerned that Trump’s threats would affect the port’s expansion plans.

Although China is the main country moving goods through Manzanillo, the port also receives goods from other Asian countries like Japan and South Korea, according to Julieta Juarez Ochoa, marketing manager for the facility. This is in addition to products coming from the United States, Canada, Australia and Latin American countries including Chile and Ecuador, she added.

“It doesn’t really worry us, because we are aware of the dynamism of Mexican ports,” Juarez said of Trump’s promised tariffs. “We continue to grow, we always seek to become an efficient and dynamic port and there will be many options for Mexico. »

Earlier this year, Mexico imposed tariffs intended to curb the flow of steel from China after the United States complained that it was ending up in products shipped to the North. across the border, thereby compromising fair competition. Sheinbaum officials also discussed how to address their own trade imbalance with China and strengthen ties with their North American partners.

Canadian Prime Minister Justin Trudeau also said his government was concerned about Mexico’s trade with China amid an upcoming review of the revised North American Free Trade Agreement under the first Trump administration scheduled for 2026 . Trudeau hopes the three countries can work constructively on these issues. over the next few months.

Some Canadian provincial leaders, including the premiers of Ontario and Alberta, argue that Canada should enter into a bilateral trade agreement with the United States because of Mexico’s more open trade with China. But so far neither Trudeau nor Chrystia Freeland, his deputy prime minister who previously led continental trade negotiations, have backed the call.

“We are looking to continue moving forward without being slowed down by the geopolitical situation,” Gasque said. His agency wants Mexican ports to be able to “adapt to the political situation that exists at any time.”

The fight against drugs is also one of the priorities of the new Trump administration. And the Port of Manzanillo continues to work on improving its safety protocols to attract more customers, especially after commitments between Mexico and the United States to reduce traffic.

“We have increased our technological capacity to detect illicit substances, including chemical precursors for the manufacture of synthetic drugs such as methamphetamine and fentanyl,” said Capt. Luis Martinez Cabrera, chief information and security officer. risk analysis of the installation.

—With help from Maya Averbuch, Robert Jameson, Brad Skillman and Travis Waldron.