**Mexico Intensifies Efforts to Replace Chinese Parts Amid U.S.-Canada Trade Pact Fears**

Amid concerns over being sidelined from the U.S.-Mexico-Canada free trade agreement, Mexico has launched a determined effort to replace Chinese components with locally produced parts. The Mexican government, led by President Claudia Sheinbaum, is urging companies to pivot to domestic production or partner with North American enterprises to mitigate the impact of Chinese imports.

This push comes in response to allegations that Mexico is facilitating the entry of Chinese parts and products into North America. Officials fear that a re-elected Donald Trump or the embattled Canadian Prime Minister Justin Trudeau may seek to exclude Mexico from the trade pact. President Sheinbaum emphasized the urgency of this initiative, noting that the country has been attempting to address this issue since the global supply chain disruption in 2021.

The task ahead is daunting, as even the United States has struggled to repatriate chip manufacturing despite massive government incentives. Nevertheless, Mexican Economy Secretary Marcelo Ebrard announced that by next year, Mexico plans to start producing microchips domestically, albeit not the most advanced ones initially.

In addition to encouraging local production, the Mexican government is making significant reforms to align with the trade agreement's stipulations. Plans are underway to eliminate several independent regulatory bodies, including those overseeing anti-monopoly laws and transparency. These agencies were initially established by past administrations to protect foreign investments and ensure market fairness.

To address concerns from the U.S. and Canada, Mexican legislators are revising proposed laws to meet the trade pact's minimum requirements. This legalistic strategy aims to safeguard Mexico’s position within the agreement when it comes up for review in 2026. Economic experts believe that fully abandoning the accord is unlikely, though the review process may become contentious.

Former Deputy U.S. Trade Representative C.J. Mahoney suggested that while the U.S. may not terminate the agreement, it could indefinitely delay its renewal. This uncertainty could deter significant investments in production facilities, posing a serious risk to the trade pact’s future.

Additionally, the issue of Chinese imports remains contentious. In July, the U.S. imposed tariffs on certain Mexican steel and aluminum products to prevent China from evading import taxes. This move highlights ongoing tensions, with American politicians like Senator Sherrod Brown raising alarms over the increasing flow of Chinese materials through Mexico, viewing it as a threat to American jobs and national security.

As Mexico navigates these complex challenges, it remains to be seen whether their efforts to bolster local production will be sufficient to secure their place in the North American trade landscape.