Trump 2.0 Won’t Stop The Trend Of Nearshoring Investment In Mexico (Opinion)

Guest author: Mark Vickers, Executive Vice President and Head of International Logistics, Reliance Partners.

For casual observers, Mexico’s economy may seem to be facing unprecedented uncertainty. But, within the logistics sector there seems to be unshakable confidence that in spite of the recent spike in short-term turbulence, the “nearshoring” trend is here to stay.

Executives at U.S. companies with operations in Mexico aren’t scrambling to sell off or shut down their factories in Mexico. The bigger long-term trend of supply chain diversification away from China is widely expected to overshadow any short-term flare-ups with Mexico.

As he prepares to start his second term in office, Donald Trump’s tendencies are already familiar to business leaders.

On Monday, November 25, he shared a post on social media threatening Mexico, saying “I will charge Mexico a 25% Tariff on ALL products coming into the United States.” Mexico’s president quickly responded with a counterthreat of retaliatory tariffs and a warning that a trade war would hurt both countries. By November 27, Trump had already pivoted to praising what he called “a very productive conversation” with Mexico’s president.

Concerns about the future of the US-Mexico trade relationship are understandable. The country’s economy is already losing steam in 2024, and the prospect of a combative Trump administration sent Mexico’s peso to hit a 2-year low in early November.

Mexico’s peso fell again after Trump threatened new tariffs on Mexican exports. Mexico’s economy is on track to grow by only 1% in 2025.

Mexican President Claudia Sheinbaum. Image credit: @Claudiashein via X.

Mexico’s current president, Claudia Sheinbaum, a somewhat prickly former scientist who is firmly committed to extending the legacy of her popular predecessor’s populist political program, is facing down a budget deficit as is being forced to make difficult budget cuts during her first year in office.

But, in spite of Mexico’s vulnerability to disruptions of its trade relationship with the U.S., the underlying trends and economic factors driving nearshoring will continue to drive investment in Mexico. Mexico exported $475 billion to the U.S. in 2023, making it the U.S.’s biggest trading partner. Within the logistics sector, most executives think this trend will continue over the next decade. Bank of America expects to double its client volume and revenue in Mexico by 2030.

A new report from the U.S. Chamber of Commerce shows that more than a quarter of the companies that currently operate production facilities in Asia say they are planning to withdraw from that region during the next five years. Meanwhile, some 14% of businesses that do not currently operate factories in Mexico say  that they are planning to invest in Mexico during the next five years. Furthermore, 60% of the companies that have already invested in Mexico say they are planning to continue their investments in crossborder commerce over the upcoming two years.  

For many foreign executives, the concerns about cross-border trade with Mexico are more mundane. Protecting shipments on Mexico’s roadways is a top priority. Mexico’s is now the world’s worst hotspot for cargo truck hijacking. While U.S. politicians sometimes refer to the border region as a “warzone” nearshoring executives know that for trucking routes Mexico’s northern border states are actually quite safe. Reliance Partner’s Mexico Cargo Truck Hijacking Data Portal shows that most cargo truck hijackings in Mexico take place on roadways in central Mexico. The states of Estado de Mexico, Jalisco, Queretaro, Puebla, and Guanajuato, all of which are major hubs of nearshoring investment, are also serious focal points for violent cargo truck hijacking.

When I talk to executives at U.S. companies that are managing complex cross-border supply chains, I’m not hearing panic about Mexico’s role as a nearshoring hub. I hear people continue to focus on more ordinary concerns such as traffic delays at border crossings and the need for additional investment in highway infrastructure and roadway security.

Mexico is the U.S. economy’s most important trading partner. This interdependence cements Mexico as a long-term commercial ally for the U.S. It’s possible that over the next few months Mexico’s peso will periodically dip and recover as the result of ongoing (but ultimately superficial) public political jousting. But, executives at multinational U.S. companies aren’t going to turn their backs on Mexico. During 2025 and beyond, nearshoring companies are likely to just keep on trucking.

Mark Vickers is the Executive Vice President and Head of International Logistics at Reliance Partners. His opinion columns on Mexican trade and economic trends have been published in The Dallas Morning News, The San Diego Tribune, The Hill, and the Wilson Center’s Mexico Institute.