The country hopes to produce goods locally that are currently imported from Asia.
The Mexican government mulls tax credits to attract foreign companies to the country, Deputy Foreign Trade Minister Luis Rosendo Gutiérrez Romano told Reuters in an interview. The measure would specifically target high-tech industries such as electric vehicle, battery, or semiconductor manufacturers, as well as companies within the rare earth sector. “We are seriously analyzing creating tax credit incentive programs very similar to those in the United States and Canada,” Romano said.
Through the Inflation Reduction Act and the Chips and Science Act, the U.S., under President Joe Biden, has successfully mobilized billions in tax credits, subsidies, and direct investments to support the domestic production of high-tech and clean-tech goods, among other fields. In total, almost one trillion dollars in commitments have been announced by private companies so far, data by the White House shows. The renaissance of domestic U.S. manufacturing prompted other nations, such as the European Union, to impose similar measures in the past. The state union enacted the Green Deal Industrial Plan as a response to enhance the competitiveness of Europe’s net-zero industry.
The measures the Mexican government considers could position the country as a manufacturer of goods currently being imported from Asia, Reuters adds. The news agency cites a document that shows the government in Mexico City has begun working with different companies to assess what products specifically could be replaced by domestic manufacturers.
Despite the possible replacement of Asian goods, Deputy Foreign Trade Minister Romero emphasized that possible incentives would apply to firms from all countries, including Chinese ones. In April, the previous Mexican government had announced it would not give Chinese carmakers such incentives following pressure from the United States. The U.S. feared Mexico could serve as a “back door” to circumvent tariffs and enter the North American Free Trade Agreement without paying levies. In May, the Biden administration announced import tariffs on a swath of Chinese goods, including EVs, batteries, and magnets (we reported).
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