Mexico Launches $3 Billion Port Manzanillo Expansion
Mexico is making a big bet on trade growth by formally launching a planned expansion of the port of Manzanillo that will cost close to $3 billion and quadruple its capacity, making it one of Latin America’s largest ports.
Manzanillo is located on Mexico’s southern Pacific coast in the state of Colima, south of the popular tourist destination of Puerto Vallarta.
The expansion is scheduled for completion by 2030. The expanded port would cover more than 1,800 hectares (4,448 acres) compared with the existing 450-hectare footprint. That additional land and equipment will allow annual container capacity to more than double to 10 million 20-foot TEUs, according to retired Admiral Mario Alberto Gasque, general director of Asipona Manzanillo, the Mexican Navy agency that runs the port.
The 55 billion-peso ($2.7 billion) expansion of the port would make it one of the top 20 container ports in the world, with annual volumes comparable to the Port of Los Angeles, according to Bloomberg, which broke the story. It would be the busiest container port in Latin America.
According to an October 2023 report released by Standard Chartered, a global multinational banking firm headquartered in the United Kingdom but doing extensive business in Asia, overall global trade is projected to grow by an average of 5 percent a year between now and 2030, but certain high-trade corridors between Asia and other regions will average more than 8 percent annual growth, powered by growing middle-class wealth in Asia, the Middle East and Africa.
The Standard Chartered report assumes lowering of both tariff and non-tariff trade barriers and does not take into account the shift of some parts of the world toward higher tariffs. President-elect Donald Trump has roiled international markets with his tariff threats. On his platform, he recently promised to impose across-the-board new tariffs on Mexico and Canada of 25 percent on the first day of his presidency, to encourage them to crack down on illegal immigration, along with an additional 10 percent tariff on all Chinese goods to encourage China to crack down on what Trump alleges to be Chinese exports of fentanyl precursors to the U.S. Together, the three countries account for about 40 percent of U.S. imports.
The United States is Mexico’s largest trading partner, and Mexico is the top buyer of many U.S. agricultural exports. Even after the tit-for-tat tariffs stemming from Trump’s first term, the U.S. accounts for about 15 percent of Chinese exports.
Mexican President Claudia Sheinbaum has defended against Trump’s accusations that said Mexico is a “back door” for tariffed Chinese products assembled in Mexico. She said Mexico would respond with its own tariffs on U.S. goods if Trump makes good on his tariff threats. At the same time, she was reported to be exploring ways to replace Chinese parts in Mexican-assembled goods.
China has been increasing its trade ties in Latin America. Chinese President Xi Jinping recently flew to Peru to inaugurate a $3.5 billion megaport in the Peruvian city of Chancay, built and majority-owned by China state-owned shipping company Cosco.
According to the World Economic Forum’s figures, trade between China and Latin America grew 26-fold between 2000 and 2020 (increasing from $12 billion to $315 billion); and is expected to double again by 2035, reaching more than $700 billion.
