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Global supply-chain diversification to Mexico, Vietnam and India still runs through China

Isimarkets • October 2, 2026

Amid reports that Mexico could be near a deal to reduce Donald Trump’s tariffs, we’re revisiting the “connector economy” phenomenon. For corporations, this is also known as “China +1,” where inputs from China are used in Mexican and Vietnamese production of US-bound goods.

The US is buying far fewer goods from China than it did before trade tensions escalated in Trump’s first term. Meanwhile, Mexico’s of US imports has steadily climbed. Vietnam’s has increased particularly strongly in Trump’s second term; India is also gradually taking on a greater role in “China +1” strategies.

For Mexico and India, their change in imports from China since 2017 is striking – and intermediate goods (i.e. production inputs used to manufacture final goods) dominated in both cases. This phenomenon brings investment, manufacturing capacity and jobs – but also greater exposure to Chinese upstream supply and US final demand (and political pressures).

The full story

This article is one source in a clustered incident — the cluster page carries the summary, timeline and every other outlet covering it.

Mexico Navigates Trade Talks Amidst Chinese Competition As the US and Mexico engage in trade discussions, the impact of Chinese competition looms large. Mexico is balancing US demands to limit Chinese goods against its own manufacturing needs. The country faces a significant trade deficit with China, which has doubled to approximately $120 billion annually over the last decade. Mexican manufacturers report overwhelming competition from Chinese products, leading to increased lobbying for government support. The situation is compounded by the global economic landscape, where many countries are struggling to compete with China's export-driven economy. The recent G20 meeting saw calls for addressing external surpluses, with China’s current account surplus reaching $735 billion in 2025, the highest in 16 years. This ongoing trade dynamic highlights the complex interdependencies in global supply chains, particularly for Mexico, which is increasingly seen as a key player in the “China +1” strategy for US-bound goods. 2 sources 46

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China India Mexico Vietnam