A high-profile raid on Mexico-based Yiwu International Trade City highlights the nation’s push to reduce import dependence and bolster local manufacturing.

No sooner after the US presidential election concluded, a swift raid unfolded in Mexico City.

On November 28, over 200 Mexican law enforcement officers conducted a seven-hour raid on Yiwu International Trade City in Mexico’s capital, seizing more than 262,000 imported items valued at approximately MXN 75 million (USD 3.7 million). Shortly afterward, officials held a press conference where Mexico’s Secretary of Economy Marcelo Ebrard confirmed, citing the Attorney General’s Office (FGR), that the property and entire building would be confiscated and all contraband destroyed. Authorities alleged the goods violated Mexico’s import regulations and safety standards.

In response to questions regarding the connection between Yiwu International Trade City in Mexico and its namesake in China, Zhejiang China Commodities City Group issued a statement on December 4 clarifying it has no affiliation with the Mexican entity. The company emphasized that its only overseas branch, established through local partnerships, is in Dubai.

This was not the first regulatory action against the facility. In July, it was raided for lacking the necessary documentation to validate land-use rights. Although operations resumed in late August, the latest raid reignited scrutiny.

The controversies surrounding Mexico’s Yiwu International Trade City stem from issues such as business qualifications and product compliance. Mexico’s close economic ties with the US significantly influence its import policies. Although Donald Trump has yet to assume office, merchants targeting the North American market are already feeling the pressure of impending changes.

At the press conference, Ebrard revealed that the Yiwu International Trade City in Mexico had been raided three times prior. In March and July, authorities cited smuggling and inadequate business documentation as reasons for sealing the premises, suggesting that its large-scale trade activities had already drawn regulatory attention.

Situated at Izazaga 89 in downtown Mexico City, the 16-story facility sold a variety of goods—primarily imported from China, Malaysia, Indonesia, Bangladesh, and Vietnam—including electronics, toys, apparel, and jewelry. According to a 2023 Zhejiang Daily report, over 90% of vendors in the marketplace were Chinese. Despite opening just four years ago, it thrived, with even small shops selling e-cigarettes reportedly making daily sales of MXN 20,000 (USD 992).

Frequent raids highlighted compliance issues, including intellectual property violations. Ebrard stated that the seized goods lacked proper labeling and included significant quantities of counterfeit Disney merchandise.

The government’s response this time suggests stronger enforcement measures. Beyond confiscating goods, authorities plan to review import documents and investigate shipping and customs agents, alongside implementing long-term inspections at ports and airports.

This development signals a shift in Mexico’s trade policies. Officials have expressed intent to encourage local production and reduce reliance on Chinese imports, even as domestic issues like social security, poverty, and corruption remain unresolved.

In recent years, protectionist measures have accelerated across multiple industries. In August last year, then-President Andres Manuel Lopez Obrador signed a decree increasing import tariffs on 392 product categories, including steel, aluminum, bamboo, rubber, and chemicals. Nearly 92% of these goods are subject to an additional 25% tariff, effective for two years.

In December 2023, Mexican authorities announced plans to raise tariffs on certain Chinese steel products to about 80%. Following these measures, Mexico’s former secretary of economy Raquel Buenrostro Sanchez said during an event with the Inter-American Dialogue that the nation is well aware of many products being imported at very low prices, displacing domestic producers. Although Sanchez did not explicitly name China, she noted that these underpriced imports predominantly originate from Asia.

Chinese goods, ranging from steel in heavy industries to everyday consumer items like clothing, have long been a significant part of Mexico’s market and re-export economy. However, they also pose challenges for local businesses.

Facing the pressures of large-scale raids and regulatory scrutiny, the Yiwu International Trade City’s business model may no longer align with Mexico’s evolving priorities. Positioned as the “backyard” of the US, Mexico has adopted a new strategy: nearshore outsourcing.

This approach involves shifting supply chain operations to nearby countries with geographic, timezone, and linguistic proximity. Amid global geopolitical tensions, the US has promoted nearshoring to mitigate vulnerabilities in its supply chains.

As a result, Mexico has attracted substantial foreign investment from the US. In 2023, the country recorded USD 36.06 billion in foreign direct investment—a historic high and a 2.2% year-on-year increase—with 38% of the funds coming from the US.

Chinese companies, particularly in the appliance and automotive manufacturing sectors, have also established local facilities in Mexico. According to ProMexico, approximately 16% of Mexico’s imports in 2024 are projected to come from China, with many of these goods now produced locally.

Mexico views foreign investment as a means to enhance employment and economic growth, presenting a more sustainable alternative to the gray market goods and IP risks associated with businesses like locally based Yiwu International Trade City.

As Mexico’s e-commerce market expands—expected to reach USD 28 billion in 2024, a 22% year-on-year increase—the demand for traditional physical outlets has declined. Simultaneously, the government is making significant investments in infrastructure. Mexico’s transport and communications secretariat plans to allocate over USD 22 billion this year to develop ports, railways, and highways to meet logistical demands.

Despite ongoing challenges in infrastructure and public safety, Mexico’s trajectory emphasizes government-led initiatives, foreign investment, and domestic capacity building. The decline of businesses like the Yiwu International Trade City was likely inevitable—the recent raid simply accelerated the outcome.

The timing of the raid coincides with Trump’s recent announcement on his social media platform, proposing a 25% tariff on all imports from Mexico and Canada. Such a move would undermine the tariff-free benefits of the United States-Mexico-Canada Agreement (USMCA) and could destabilize Mexico’s domestic industries.

At this economic juncture, Mexico’s decisive crackdown reflects a broader strategy to prioritize local industries and strengthen trade policies. It underscores the growing importance of regulatory compliance for businesses operating internationally—no market will tolerate gray areas indefinitely.

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