Joshua Meltzer, a senior fellow at the Brookings Institution, stated that the U.S. needs to collaborate more closely with Canada and Mexico on trade and investment restrictions with China to effectively "de-risk" the U.S.-China economic relationship. Meltzer shared his views in a June 7 commentary.
"Going forward, the U.S. should coordinate more closely with Canada and Mexico on any new trade and investment restrictions applied to China," said Meltzer. "The fact is that for the U.S. to effectively de-risk its economic relationship with China, a more coordinated North America approach is required. Failure to build a cohesive North American approach will likely lead to the U.S. adopting a more go-it-alone, less effective approach when it comes to China, and would be a missed opportunity to further strengthen North American economic relations."
According to Meltzer, the U.S., Canada, and Mexico should work together for regional security by strengthening the North American economy and making it more competitive. He emphasized the importance of North American solidarity, noting that "75% of Canada’s exports and 78% of Mexico’s exports are to the U.S., and 33% of U.S. exports go to Canada and Mexico." He highlighted that North American trade is interconnected in supply chains involving medical equipment, automotive, IT products, pharmaceuticals, chemicals, and more.
Meltzer recommended "leveraging the already deep automotive supply chains" by reducing dependence on automotive vehicles and electric semiconductors from China. The U.S. has implemented increased investment restrictions such as tighter inbound investment screening, heightened requirements for U.S. investors to notify the U.S. Treasury Department about investments in China's sectors, export controls on U.S. technology like high-end semiconductors, and increased tariffs.
According to a White House press release, President Joe Biden’s economic agenda focuses on increasing Section 301 tariffs in areas such as aluminum, steel, electric vehicles, semiconductors, tariffs, and medical products due to China’s unfair trade practices and the risks of being economically dependent on China for production. The Biden administration aims to change ship-to-store crane tariffs from 0% to 25%.
Meltzer noted progress towards de-risking under the United States-Mexico-Canada Agreement (USMCA) Free Trade Commission (FTC). On May 22, Ambassador Katherine Tai, Canadian Trade Minister Mary Ng, and Mexico Secretary of Economy Raquel Buenrostro agreed to expand coordination on non-market policies that could harm the workforces of their respective countries. They also agreed to develop better ways to cooperate during emergencies impacting trade flows—such as COVID-19—and prevent imports produced with forced labor or other labor concerns like forced Uyghur labor in China's Xinjiang region.
Meltzer is a senior fellow in the Global Economy and Development program at the Brookings Institution with research areas including business and workforce issues, climate change, development financing, and global trade. He has testified before the U.S. Congress, U.S. International Trade Commission, and European Parliament and was previously a diplomat at the Australian Embassy in Washington D.C.
