US Proposes Stricter AI Hardware Export Rules for Mexico to Counter China, WSJ Reports

The U.S. government is urging Mexico to implement new regulations on exports of artificial intelligence hardware in an effort to prevent Chinese companies from bypassing American tariffs, according to a Wall Street Journal report citing people familiar with the matter.

Stricter Rules of Origin Proposed

The proposal focuses on tightening the "rules of origin" for AI hardware, which includes critical components like semiconductors and servers. Specifically, the U.S. wants to restrict the amount of components sourced from outside North America that can be used in hardware manufactured in Mexico and then exported to the United States.

This measure is designed to close a potential loophole. While the U.S. has imposed significant tariffs on many Chinese products, levies on Mexican goods are substantially lower under existing trade agreements. The concern is that foreign firms could assemble products in Mexico using non-regional components to avoid the higher U.S. tariffs.

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High Stakes for US-Mexico Trade

The negotiations carry significant weight for both economies, particularly as the trade landscape shifts. According to the report, AI hardware has become Mexico’s top export to the U.S. this year, surpassing the automotive sector.

These discussions are reportedly part of broader negotiations to revise the U.S.-Mexico-Canada Agreement (USMCA). A new round of talks between U.S. and Mexican trade officials is expected to be held in Washington as early as next week, the sources told the Journal.