Business
MBA Career Opportunities: Manufacturing Boom in Mexico Attracting US and Chinese Investment
Last Updated on April 29, 2024 by Robert C. Hoopes
Mexico’s Manufacturing Sector Thrives as US Supply Chains Shift Away from China
In a major shift, Mexico’s manufacturing sector has emerged as a winner as US supply chains decouple from China. The trend of nearshoring, or bringing production facilities closer to home markets, is on the rise as companies seek to reduce risks and costs associated with overseas production.
This move has propelled Mexico to surpass China as the top exporter to the US in 2023, with the country’s manufacturing sector driving this growth. US imports from Mexico continue to increase, while Chinese exports to the US are on the decline.
Free trade agreements like the US-Mexico-Canada Agreement (USMCA) have made trade in North America more cost-effective and efficient, further encouraging the shift away from Chinese manufacturing. The US policy to decrease reliance on China has paved the way for China to access new markets and avoid US tariffs.
To prevent countries from evading tariffs on steel and aluminum, the US has been collaborating with Mexico. Both President Joe Biden and former President Donald Trump have taken different approaches to grow domestic manufacturing and reduce dependence on China.
With companies moving factories to Mexico, the Mexican manufacturing industry is experiencing long-term opportunities for growth. It is expected that Mexico’s exports to the United States will continue to grow significantly in the next five years.
In response to the shifting dynamics, Chinese companies are likely to increase investment and exports to Mexico in anticipation of the 2026 review of the USMCA. This review will determine the future of trade relations in North America and will have far-reaching implications for all parties involved.
