US Pushes to Limit Chinese Parts in AI Equipment Made in Mexico

The US is moving to restrict the use of Chinese components in artificial intelligence servers, semiconductors and other equipment made in Mexico. The approach would mirror auto trade rules, granting tariff-free treatment only if a certain share of parts is sourced from North America. The aim is to block Chinese components from being assembled in Mexico and shipped to the US through a backdoor export route.

The US is making the demand as part of negotiations to revise the US-Mexico-Canada Agreement, the Wall Street Journal reported on September 17. Washington is seeking limits on the share of parts from China and other regions outside North America used in AI equipment produced in Mexico.

The plan would extend rules-of-origin requirements now applied to automobiles to AI equipment. Under the current USMCA, cars qualify for tariff-free treatment only if at least 75% of the value of their parts is sourced from North America. The North American content threshold for AI servers and other equipment, as well as the timing of implementation, has not yet been decided.

The move is intended to prevent Chinese products from being rerouted to the US through Mexico. Mexico has recently emerged as a key manufacturing base for the US AI industry. Mexico's exports of computer servers for AI data centers totaled $83 billion in the first half, up more than 170% from a year earlier, according to S&P Global. Of that amount, 94% went to the US.

The shift followed steep US tariffs on Chinese goods, which prompted electronics manufacturers including Taiwan's Foxconn to use production bases in Mexico to supply parts to the US. If the new rules of origin are adopted, those companies would need to raise the share of North American components to retain tariff-free benefits.

Lee Hye-in, Hankyung.com reporter hey@hankyung.com