U.S. Targets Chinese Content in Mexico’s Booming AI Hardware Trade

U.S. negotiators are pushing Mexico to consider tighter requirements governing where components used in artificial-intelligence hardware originate, according to people familiar with the discussions. The aim is to prevent Chinese companies and other foreign manufacturers from using Mexico as a route around U.S. tariffs and other trade restrictions.

The proposal would place limits on the share of non-North-American parts used to manufacture AI-related equipment, including chips and servers. These products have become Mexico’s largest export category to the United States this year, overtaking automobiles. The sourcing provisions, commonly known as rules of origin, are being discussed as part of talks over the future of the United States-Mexico-Canada Agreement. President Trump has repeatedly warned that the three-country trade pact could be abandoned. Although Washington has imposed tariffs on certain Mexican products, the overall burden on Mexican goods remains considerably lighter than the tariffs applied to many Chinese imports.

People familiar with the negotiations said U.S. and Mexican trade officials could hold another round of discussions in Washington as soon as next week. The agenda is also expected to include possible changes to U.S. tariffs on steel, aluminum and automobiles.

The United States may seek similar restrictions in other industries as well, including medical equipment and a broader range of consumer goods. The broader goal would be to reduce Chinese input while increasing the proportion of components sourced from North America. Cars, automotive parts and some advanced computer chips already face tariffs under the Trump administration, while more widely used semiconductors that support the AI infrastructure expansion can still enter the United States with little or no tariff exposure in many cases.

Sen. Bernie Moreno, Republican of Ohio, who has spoken with Mexican industry organizations about possible origin requirements for emerging industries, argued that China could otherwise use Mexico as a channel into the U.S. market. He said Washington needs stronger safeguards so that USMCA does not effectively allow Mexico or Canada to serve as intermediaries for Chinese products seeking to avoid U.S. trade restrictions.

The White House, the Commerce Department and the Office of the U.S. Trade Representative did not provide comments on the matter. U.S. Trade Representative Jamieson Greer, however, said during a July appearance at the Aspen Security Forum that he intended to broaden the application of USMCA rules of origin to additional strategic sectors, including electronics and pharmaceuticals. Greer said the existing provisions could be tightened and that U.S. officials were working with Mexico to identify industries where more production could be moved back to North America.

The issue has become more significant as trade in technology products between Mexico and the United States has expanded at extraordinary speed, helping supply the rapid growth of America’s AI infrastructure. At Laredo, Texas, the country’s busiest land-trade gateway, annual computer imports were around $6 billion between 2021 and 2023. That figure rose to $13.4 billion in 2024 before reaching $30.8 billion in 2025, according to Daniel Covarrubias, a trade specialist at Texas A&M International University.

The acceleration has continued this year. S&P Global data show that Mexico exported about $83 billion worth of computer servers used in AI data centers during the first six months of the year, with roughly 94% destined for the United States. The value represented an increase of more than 170% from the comparable period. Covarrubias, who heads the Texas Center for Border Economic and Enterprise Development, said the rapid pace of expansion is particularly difficult for trade networks and policymakers to absorb.

At the same time, companies from Taiwan, including Foxconn, have expanded their manufacturing operations in Mexico and are producing AI servers and related components for U.S. technology customers such as Nvidia. Their businesses could face additional pressure under stricter sourcing requirements, depending on the proportion of their parts and materials that come from North America compared with supplies imported from Asia. The development is occurring even as overall U.S. imports from China have fallen amid higher American tariffs.

U.S. officials are considering extending to AI hardware and other industries the kind of sourcing standards already applied to automobiles. Under the automotive provisions, vehicles must generally contain at least 75% North American content to qualify for duty-free treatment under the trade agreement. The technology proposal is still at an early stage, and Washington has not yet specified the precise North American or U.S. content thresholds it would require for each industry. Officials also have not indicated how long companies would have to transition toward the new requirements. More details could emerge when American and Mexican negotiators meet again.

Jay Gerard, senior vice president at Worldwide Logistics Group, said the surge in technology imports has made the question of where products are actually made increasingly difficult to determine. He said some additional scrutiny of supply chains was therefore foreseeable.

Mexico has itself treated China as a significant trade competitor for years. Mexican authorities have already agreed to raise duties on Chinese imports and to take steps aimed at preventing Chinese-made goods from being rerouted through Mexico and subsequently shipped into the United States without tariffs. At the same time, Mexican officials are seeking to avoid highly specific U.S.-content mandates that they believe could undermine the basic structure of the North American free-trade framework.

Business groups have warned that expanding rules of origin into additional industries could increase administrative burdens, complicate supply chains and raise the cost of manufactured goods. The issue could also make future negotiations with Canada more difficult. Mexico is already engaged in formal discussions with the United States over USMCA, while Canada has not yet begun equivalent negotiations and remains caught in a worsening tariff dispute with Washington.