Can the US Really De-link from Mexico?
There has been much talk in our political discourse about the United States de-linking from Mexico. Is this really possible? How would it impact the auto industry? Gary Gereffi, director of the Duke University Center on Globalization, Governance & Competitiveness, has been researching the competitive strategies of global firms, the governance of global value chains, industrial upgrading in East Asia and Latin America and the emerging global knowledge economy. While in Washington DC for a series of meetings with different international organizations, Professor Gereffi answered this question in a short video. The following is a transcript from the video.
“The question of whether the US can de-link from Mexico, I think the answer is that they can’t very easily. In industries like the automobile industry, US, European and Japanese companies that are supplying the US market have high-tech factories in Mexico that are producing key parts and are finishing automobiles for the US. Similarly we have connections to Canada auto parts’ industries. So I think over the last 20 plus years, we’ve built since NAFTA a North American automotive supply chain that is one of the most efficient industries in the world. It would be impossible for the companies to re-organize their supply chains in the US without losing major investments in Mexico in high-tech state of the art facilities. So I don’t think we can de-link and if we even tried to de-link from Mexico it would take 3–5 years and at that point the policies might change again. So I view the economic nationalism that the Trump administration is currently promoting as a short term policy that would try to reverse 25 years of regional integration.” — Professor Gary Gereffi