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(Bloomberg) — Weeks after the start of her government, Mexican President Claudia Sheinbaum is giving signs that she’ll come down on the side of the US over China, if she’s forced to choose.

Whether that’s enough to prevent Donald Trump from sweeping her up in the punitive tariffs he’s threatened in his second term is another matter.

As Sheinbaum attends the Group of 20 summit in Brazil, her fellow leaders will be keen to sound out the new president on her role on the front line of what risks becoming a global trade war.

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After all, she’s the first Mexican leader to show up at a G-20 since 2018 — when Trump was last in power — after her famously travel-averse predecessor Andres Manuel Lopez Orbador habitually sent his foreign minister in his place. 

Her schedule in Brazil suggests two things: she doesn’t want to get on the wrong side of Trump and is avoiding openly taking sides. There are one-on-ones with eight leaders, but neither Joe Biden nor Xi Jinping are among them, though Mexico’s foreign minister said China had asked for a meeting. 

Sheinbaum is walking a fine line as she shows a willingness to cooperate with the US on topics like curbing migration and cooling relations with China, without coming across as a pushover. The reality, though, is that Washington is Mexico’s No. 1 trade partner and Beijing comes a long way behind.

It’s a contrast to the G-20 host, President Luiz Inacio Lula da Silva, who’s yet to place a call to Trump and is opening the door to a rush of Chinese investment in Brazil. Brazil’s trade with China is already more than double the volume of that with the US. 

Since the summer, Sheinbaum’s cabinet has been talking about the need to reduce Chinese imports, which account for about 20% of the national total. Finance Minister Rogelio Ramirez de la O said that if North America produced 10% of what it currently imports from China, Mexico’s economy would grow 1.4% and US gross domestic product by 0.8%. The job gains, he said, would be 600,000 for the US, 560,000 for Mexico and 150,000 for Canada. 

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Economy Minister Marcelo Ebrard’s office has been working with the main companies that import from China — including electronics manufacturer Foxconn, chipmaker Intel Corp., carmakers General Motors Co. and Stellantis NV and logistics group DHL — to identify which products could be manufactured in Mexico, according to local newspaper Reforma. The plan would also seek to keep out Malaysian, Vietnamese and Taiwanese goods, Reforma said.

The question is whether Trump sees these initiatives as an outstretched hand or as part of Mexico’s response to the Biden administration’s existing line on China.

“The increasing pressure of the United States in Mexico against China is generating a lot of uncertainties for already established investments,” said Enrique Dussel Peters, the coordinator of the Center for Chinese-Mexican Studies at the National Autonomous University of Mexico. “In the short term, firms will have enormous problems to substitute for Chinese goods and parts.”

Trump has threatened to turn the planned 2026 review of the US-Mexico-Canada Trade Agreement into an outright renegotiation, and slap extra tariffs on Mexico. The pact and its predecessor, NAFTA, have been a boon to Mexico’s manufacturing sector that now employs some 5 million people. But Trump wants to see Mexico close its doors to Chinese automakers who might export to the US.

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He’s threatened machinery giant Deere & Co. with tariffs if it moves a plant to Mexico, potentially throwing a wrench into the “nearshoring” process that has promised to bring millions of investment dollars to Mexico. Ebrard, who was foreign minister during Trump’s first term and will lead the USMCA review, has argued that it wouild be a lose-lose situation, saying that tariffs will hurt US companies operating in Mexico, especially in the auto industry.

Already Honda said that new tariffs on cars imported into the US from Mexico could impact the delivery of thousands of vehicles, while billionaire Trump adviser Elon Musk has said he’s holding off on building his new Tesla Inc. plant in Mexico.

It’s a development that’s not bypassed Beijing, with an op-ed in the state-backed Global Times touting the “vast” potential for economic cooperation between China and Mexico. “If US politicians continue to place pressure on Mexico and try to undermine normal economic cooperation, it will certainly harm Mexico’s economic potential,” it said in October. 

Campaign Rudeness

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Sheinbaum bristled against Trump when he was on the campaign trail, calling his language “rude” in a post on X after he spoke in dismissive terms of his prior negotiations with Mexico. She hasn’t rushed to get to him like other leaders who headed straight to Mar-a-Lago. 

While encouraging Mexicans to “go to their consulates” amid concerns about his deportation plan, she also told people to stay calm. She’s insisted that the US-Mexico relationship will be “very good” and described their first phone call as “cordial.” 

Once the two meet, “we’ll continue the high-level dialogue we’ve had on issues of fentanyl, migration and the economy, which is fundamental to strengthen our economic relationship,” she said to press in Mexico City on Nov. 13. 

Officials in Sheinbaum’s cabinet have tried to remind Trump that the USMCA was a good deal for him, too. After all, he signed it into law himself in 2020. 

Mexico’s previous president, known as AMLO, was an unlikely fan of Trump, and Sheinbaum is his chosen successor. And while AMLO made the trip to meet with Xi last year in San Francisco, their agreement to crack down on shipments of chemicals used to make illegal drugs was another effort to appease the US. It was in any case nothing like the frequent meetings with Xi of his predecessor, Enrique Peña Nieto, and his celebration of China’s purchases of Mexican pork and tequila. 

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The last time Trump threatened tariffs, in 2019, Mexico readily agreed to a crackdown on migration. This year, its convoluted plan to apprehend and bus migrants to southern Mexican states has helped bring US-Mexico border crossings down by about 76% since December, according to data from the Mexican government. In April, it put tariffs on a host of goods from China, partly in response to US concerns about “dumping” of reduced-cost steel.

That leaves Mexico figuring out how much further to go to appease its irritable neighbor. Chinese companies, too, have continued to set up shop in Mexico. Electric vehicle maker BYD Co. said this month it’s evaluating locations in Mexico for a plant to serve the Latin American market, and other Chinese suppliers have set up in industrial parks near the US border.

Mexico did shun one Chinese company, Ganfeng Lithium, after AMLO’s government nationalized lithium mining, depriving it of a project valued at more than $1 billion. But it has not, until now, stood in the way of other Chinese investment.  

All in all, it seems like Sheinbaum wants to avoid any kind of fireworks. Her team has turned to the data, which is what people expect from the Mexican leader, who has a PhD in energy engineering. She said earlier this month that Mexico was working on reports outlining the contributions of Mexicans abroad in fields such as medicine and construction, and another on USMCA’s benefits for the US — a methodical, if cheeky, strategy.

“We’re always going to defend Mexico,” she said. 

—With assistance from Sam Hornblower, Amy Stillman and Carolina Millan.

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