Mexico Expands Port in Cartel Territory, Courting China Amid Tariff Fears

Newsweek

01-05-2025

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
As the United States tightens its trade posture under President Donald Trump, Mexico is making a bold infrastructure play with geopolitical and economic implications.
President Claudia Sheinbaum is overseeing a major expansion of the Port of Manzanillo—Mexico's largest and most strategic seaport—in a bid to transform the country into Latin America's leading maritime hub and a potential cornerstone of U.S. supply chains.
The project, dubbed "Nuevo Manzanillo," is part of Sheinbaum's "Plan Mexico," designed to defy an International Monetary Fund forecast projecting a 0.3 percent economic contraction this year amid heightened U.S. tariffs.
Why It Matters
Since returning to office, Trump has reintroduced sweeping tariffs under a new doctrine of "reciprocal trade." While most of those reciprocal tariffs are currently in the middle of a 90-day "pause," a 10 percent global baseline tariff and a 25 percent duty on imported automobiles and auto parts are in effect.
Major trading partners like Canada and the European Union were hit hard, but Mexico has — at least so far — been largely spared, thanks to months of quiet negotiations with the White House by Sheinbaum's team.
What to Know
While Mexico has so far avoided the brunt of Trump's renewed tariff blitz, the threat remains ever-present. His isolationist tariff doctrine has already hit other major U.S. trade partners with sweeping duties on automobiles, steel and general imports. Mexico's current exemption is more of a temporary reprieve than a guarantee—one that could vanish in a single post or policy shift.
"There are no additional tariffs on Mexico, and that is good for the country," President Sheinbaum said, crediting "the good relationship we have constructed with the U.S. government." But behind that diplomacy lies a clear subtext: Mexico is preparing for a world in which it can no longer rely on U.S. stability.
A recent satellite image of the Port of Manzanillo, Mexico's largest and busiest seaport, showing the existing terminal infrastructure ahead of a major expansion that aims to quadruple its capacity by 2030.
A recent satellite image of the Port of Manzanillo, Mexico's largest and busiest seaport, showing the existing terminal infrastructure ahead of a major expansion that aims to quadruple its capacity by 2030.
MAXAR TECHNOLOGIES
Already Mexico's busiest port and the third largest in Latin America, Manzanillo handled approximately 3.7 million containers in 2023. The expansion will quadruple its footprint from 1,112 acres (450 hectares) to 4,645 acres (1,880 hectares), adding four specialized terminals for containers, hydrocarbons, general cargo, and storage.
The project, situated on the Pacific Ocean south of Puerto Vallarta, also includes a thermoelectric plant and six electric cranes, each with a 143,000-pound (65-ton) capacity, to increase efficiency. The Mexican Navy, which is overseeing the development, says it will incorporate solar and wind power to minimize environmental impact.
Officials aim to boost capacity to 10 million containers annually by 2030—positioning Manzanillo as a Pacific rival to the Port of Los Angeles, which processed 8.6 million containers last year.
Forging Closer Ties With China
The expansion of the Port of Manzanillo is a central piece of Sheinbaum's long-term strategy—not just to handle redirected trade flows, but to build durable, alternative trade routes.
Optimists see it as a win-win for Mexico and the U.S. "Mexico will emerge as an even closer and more strategic trade partner of the United States," said Ram Ben Tzion, CEO of the digital supply chain firm Publican. "And as such will become an alternative to many Chinese manufacturing capacities."
He added, "If De Minimis is canceled for Chinese goods in the near future, this process will accelerate exponentially." The "de minimis loophole," which allows packages to enter the U.S. without duties if they're valued at $800 or less and is heavily leveraged by Chinese e-commerce brands like Temu and Shein, is set to expire on Friday.
Mexico's President Claudia Sheinbaum speaks during her daily press conference at Palacio Nacional in Mexico City on March 27, 2025.
Mexico's President Claudia Sheinbaum speaks during her daily press conference at Palacio Nacional in Mexico City on March 27, 2025.
Photo by SERGIO MORALES/AFP via Getty Images
But not everyone sees the port expansion as a strategic masterstroke. Critics warn it could create new risks—for trade, security, and even relations with Washington.
The decision to push ahead with the multibillion-dollar project signals a broader pivot away from reliance on U.S. trade stability, said Todd Belt, director of the political management program at George Washington University. "The issue is that [Trump] has followed through with tariffs, which has created a lot of anxiety," he said.
Sheinbaum is hedging her bets. Her administration has launched an 18-point industrial policy to strengthen domestic production in key sectors like auto parts, pharmaceuticals and agriculture. "We will announce a comprehensive program, not a tit-for-tat on tariffs," she said earlier this month.
Part of the calculus also involves China. "Mexico can, and likely will, be a big winner in the decoupling process we're witnessing," said Tzion, of Publican. "Tariffs and trade are only one element of a broader power struggle for global dominance between the U.S. and China. Mexico will be a key ally and asset to the U.S."
In 2023, trade between Mexico and China totaled over $100 billion, making China Mexico's second-largest trading partner after the United States.
But others argue that growing trade with China—especially through a vastly expanded port a straight shot across the Pacific—comes with consequences. "The port expansion is a double threat," warned Arturo McFields, a former diplomat and contributor to The Hill. "It would increase trade with China and open the door for more fentanyl-related chemicals coming from Beijing."
McFields pointed to Manzanillo's location in Colima, a state with a strong Sinaloa Cartel presence. He cited the December 2024 seizure of 25 tons of drug precursors at the port and asked, "How many tons of precursors fail to be seized and end up reaching their final destination?"
The Port's most recent expansions include a new Specialized Container Terminal and a Multi-Purpose Terminal. These terminals feature capacities of 13.6 million tons and 2.46 million tons, respectively.
The Port's most recent expansions include a new Specialized Container Terminal and a Multi-Purpose Terminal. These terminals feature capacities of 13.6 million tons and 2.46 million tons, respectively.
SSA Mexico
Tzion pushed back on these concerns. "The assumption that a bigger port equals more illicit trade, and specifically more fentanyl, is far from true," he said. "Modern trade infrastructure, including advanced customs clearance and digital vetting technologies, can enable both higher trade capacity and better security."
Economic analysts also raise flags. Belt warned that the strategy could backfire if Mexico ends up triggering U.S. retaliation. "If more goods are routed through Mexico and then hit with tariffs when entering the U.S., that adds cost and complexity," he said.
"Those goods could become more expensive for American consumers, even though they're not coming directly from China."
What People Are Saying
Michael Shifter, former president of the Inter-American Dialogue, a think-tank focused on Western Hemisphere affairs, told Newsweek: "No matter what Sheinbaum does to accommodate Trump... it never seems to be enough."
Julieta Juarez Ochoa, the port's commercialization manager, told Reuters: "We don't see any real impact [of the U.S. tariffs], and we don't foresee a significant impact."
What Happens Next
The port expansion is scheduled for completion by the end of Sheinbaum's term in 2030.