US-Mexico Trade Impact

Q2 2024 set a record for northbound truck crossings from Mexico to the USA. Two charts below using data compiled by the Bureau of Transportation Statistics from Customs and Border Patrol. Thoughts: •Top chart shows quarterly not seasonally adjusted northbound truck crossings from Mexico to the USA. Q2 2024 came in at 1.97 million, which was up 4.3% from the same quarter a year ago. This figure is up 21% from Q2 2018 (the previous second quarter high prior to the COVID-19 pandemic). •Bottom chart shows year-over-year percent change at the quarterly level. The most recent quarter’s 4.3% year-over-year growth is consistent with what was observed from 2016-2018. Note that growth showed weakness during 2019 and most of 2023. The clearest outlier is Q4 2021, which was likely negative YoY because of slowdowns in U.S. motor vehicle production due to component shortages. •One thing that doesn’t quite align is Mexican manufacturing output is up only ~7% from Q2 2018. This raises the question: how are truck crossings up 20%. Some possible explanations are: [1]: More agricultural shipments heading to the USA of produce. [2]: Some freight-intensive manufacturing sectors like Mexican beverage production are sending a greater share of output northbound to the USA. [3]: Finished Chinese goods are being imported to Mexico, having a “Made in Mexico” label slapped on them to avoid tariffs, and are being sent to the USA. Implication: Q2 saw a return to solid year-over-year growth in northbound truck shipments from Mexico to the USA. It will be interesting to see how much additional growth occurs over the coming years. #supplychain #supplychainmanagement #shipsandshipping #economics #freight #trucking #logistics

What happens when the world’s biggest buyer turns away from its biggest supplier? As the United States raises tariffs on Chinese goods to 145%, the impact ripples far beyond Beijing and Washington. Global trade flows are being redrawn — and Mexico is suddenly in a position of rare strategic advantage. A 34% tariff hike, simulated using the OEC’s Tariff Simulator, projects a $437 billion drop in Chinese exports to the U.S. That’s not just disruption — it’s a vacuum. And Mexico is poised to fill it, with an estimated $108 billion in additional exports — more than Canada, Vietnam, South Korea, Japan, or Germany. But this isn’t just about geography. It’s about positioning. Mexico’s most obvious wins — computers, auto parts, furniture — build on established strengths. But what’s more telling is where Mexico is gaining ground without yet holding a comparative advantage: battery modules, lighting systems, electrical transformers. These are high-tech products Mexico doesn’t lead in today, but they’re closely related to what it already does well. The suppliers, skills, and infrastructure are already partially in place. That relatedness matters — especially as U.S. firms look to shorten and stabilize supply chains. Mexico isn’t just nearby. It’s nearby in capabilities. We’ve classified Mexico’s emerging gains into three strategic categories: • Low-hanging fruit — where Mexico already leads • Intermediate bets — where it’s gaining ground • Ambitious opportunities — complex products Mexico could lead with the right support This isn’t hypothetical. The first trade war already brought the U.S. closer to Mexico. The next one could go much further. Mexico blends scale, proximity, and industrial depth like no other. To capitalize, it must invest strategically, coordinate policy, and embrace a forward-looking industrial vision. The opportunity is real. The window is open. The question isn’t whether Mexico will benefit — but whether it will lead. https://lnkd.in/eX4cRMcm

New data released on Wednesday showed that Mexico outpaced China to become America’s top source of official imports for the first time in 20 years — a significant shift that highlights how increased tensions between Washington and Beijing are altering trade flows. The United States’ trade deficit with China narrowed significantly last year, with goods imports from the country dropping 20% to $427 billion. American consumers and businesses turned to #Mexico, #Europe, #southkorea, #India, #Canada and #Vietnam for auto parts, shoes, toys, and raw materials. America’s total trade deficit in goods and services, including exports minus imports, narrowed 18.7%. Overall, U.S. exports increased slightly in 2023 from the previous year, despite a strong dollar and a soft global economy. U.S. imports fell annually as Americans bought less crude oil and chemicals and fewer consumer goods, including cellphones, clothes, camping gear, toys and furniture. The recent weakness in imports, and drop-off in trade with China, has partially reflected the pandemic. American consumers stuck at home during the pandemic snapped up Chinese-made laptops, toys, Covid tests, athleisure, furniture, and home exercise equipment. Even as concerns about the coronavirus faded in 2022, the U.S. continued to import many Chinese products, as bottlenecks at congested U.S. ports finally cleared and businesses restocked their warehouses. “The world couldn’t get access to enough Chinese goods in ’21, and it gorged on Chinese goods in ’22,” said Brad Setser, an economist and senior fellow at the Council on Foreign Relations. “Everything has been normalizing since then.” In 2023, U.S. quarterly imports from China were at roughly the same level as they were 10 years ago, despite a decade of growth in the American #economy and rising U.S. imports from elsewhere in the world. Economists say the relative decrease in trade with China is clearly linked to the tariffs imposed by the Trump administration and then maintained by the Biden administration. There were two episodes in recent history where U.S. trade with China slowed notably. The first was when trade tensions between the countries escalated in 2018. The second was when Russia invaded Ukraine, prompting the United States and its allies to impose strict sanctions and further reshuffling global trade relationships. Some economists caution that the U.S. reduction in trade with China might not be as sharp as bilateral data shows. That is because some multinationals have shifted portions of their manufacturing out of China and into other countries but continue to source raw materials and parts from China. And companies may simply be routing goods that are actually made in China through other countries to avoid U.S. tariffs. U.S. trade stats do not record such products as coming from China, even though a significant portion of their value would have been created there. #retailing #brands The New York Times Ana Swanson Simon Romero

#Nearshoring: Partners lead the way in #Mexico. ➡ Nearshoring is becoming a strategic move for companies selling or looking to sell in the U.S. market by establishing operations in Mexico. ✅ This shift often results in shorter and more flexible supply chains and access to a talented workforce. ✅ As a result, companies can offer their customers timely and reliable service. ➡ In 2023, Mexico surpassed China as the largest exporter to the United States for the first time in a decade. ✅ From 2019 to 2023, U.S. imports of products manufactured in Mexico increased by nearly a third, reaching $422 billion. ➡ Several factors are driving this trend: ✅ The implementation of the #USMCA has accelerated the growth of nearshoring in the Mexican industrial market. ✅ The pandemic highlighted potential disruptions in global supply chains, prompting companies to seek supply sources closer to their main markets. ✅ For many U.S. companies, the average cycle time between placing an order and receiving it is likely less than a month for a Mexican supplier, compared to three to six months for an Asian supplier. ✅ This ability to respond to demand with shorter cycle times and less uncertainty is a significant benefit. ✅ Furthermore, companies find a large pool of talented labor in Mexico, which helps address labor challenges in the United States. ✅ Companies relocating to Mexico can save between 70% and 80% on payroll costs. ➡ Despite the benefits, there are also challenges: ✅ Mexico’s infrastructure is not as developed as China’s, and finding suppliers with the right technical capabilities can be complicated. ✅ However, providing training in intercultural communication and local practices can improve collaboration with Mexican partners. 👉 For companies and investors interested in capitalizing on these opportunities and gaining a clearer vision, NextGen Intelligence develops all the necessary activities to ensure the success of their operations in Mexico. ▪ We take care of providing all the key aspects, compiled and analyzed under a specialized approach, to assist those considering entering, expanding, or consolidating their presence in Mexico in developing a comprehensive and effective strategy. ▪ We can save you time, money, and headaches by assisting in the site selection process, permitting, construction, legal, and banking matters. ▪ We will ensure the success of your operations in Mexico by making your establishment in the country as straightforward as possible. 👉 This article provides information about companies that can assist you in establishing your business in Mexico: https://lnkd.in/ghmP4uwu #Nearshoring #SupplyChain #Logistics #Mexico #USMCA #GlobalTrade #Manufacturing #BusinessDevelopment #LatinAmerica #3PL #Transportation #CrossBorderTrade #RealEstate #SoftLanding

This report from Business & Human Rights Resource Centre, 'Bitter Truth: Migrant Worker Abuse in the Production of Sugar, Cocoa, and Coffee in Chiapas', published in April 2025, explores the harsh realities faced by agricultural workers in Chiapas, Mexico. It highlights a number of signficant issues with #supplychain and #procurement practices within the sector: 1. Labour Exploitation Migrant workers, including Indigenous peoples from Central America, suffer from low wages, excessively long hours, unsanitary housing, harassment, and violence, particularly targeting women. 2. Forced and Child Labour Cases of modern slavery persist, with children exposed to hazardous working conditions. 3. Health & Living Conditions Lack of healthcare and social benefits; overcrowded and unsafe housing; exposure to agrochemical pollution, linked to childhood leukaemia and other illnesses. 4. Climate Crisis Impacts Rising temperatures affect crop yields, particularly coffee. Environmental degradation due to deforestation, agrochemical use, and industrial waste mismanagement. 5. Transparency Issues Many firms lack public #humanrights policies, particularly in the sugarcane sector. The lessons for #procurement and #supplychain functions from the report include: - Strengthen supplier accountability and require suppliers to publicly disclose human rights policies. - Ensure compliance with fair labour standards. - Implement ethical sourcing practices, prioritise suppliers with strong human rights commitments. - Avoid sourcing from companies with documented labour abuses. - Monitor and audit supply chains, conduct regular audits to verify compliance with labour rights and environmental standards. - Use independent verification mechanisms. - Support sustainable procurement, encourage suppliers to reduce agrochemical use and adopt renewable energy. - Promote fair trade models that empower local communities. These recommendations aim to protect workers, increase transparency, and promote sustainability in agroindustry, but are obviously applicable across many similar supply chains.

LATAM Weekly Insight | May 26 – June 1 Deal Activity: Infrastructure & Platform Consolidation Zelestra divests LATAM business (~$1.1B) to Promigas, reinforcing consolidation across energy platforms. OXIO acquires Telefónica Movistar México (~$450M), signaling disruption in telecom through asset-light infrastructure models. Early-stage capital persists, but with smaller ticket sizes → continued selectivity in venture deployment. So what? Capital is flowing into scalable platforms and infrastructure, not fragmented growth plays. #Mexico: Industrial Depth + Capital-Intensive Shift Momentum continues across advanced manufacturing and industrial capex: Volvo Group confirms ~$1B plant in Nuevo León (Largest globally) General Motors ramps local production strategy (~80K units target) Walmart expands #AI driven logistics infrastructure Multiple suppliers (Germany, US, India) expanding manufacturing footprint At the same time: Record FDI continues, driven by advanced manufacturing and automation Manufacturing employment declines (~127K jobs) despite investment growth -New dynamic: Mexico is shifting from labor-cost advantage → capital- and technology-driven production base -Implications: Higher complexity operations; Demand shifting toward specialized operators; Lower labor intensity, higher capital efficiency #Industrial Ecosystem: Supply Chains Redefined Mexico advances diversification through new trade frameworks #USMCA review (July 2026) is already influencing investment timing and structure What this signals: Supply chains are being rebuilt for resilience, compliance, and regional integration #Brazil: Scale Still Leads Remains the region’s largest FDI recipient (~$76B+) Continued activity across fintech, AI, and healthtech Implications: Brazil anchors both capital depth and innovation scale #Argentina: Capital Gap Persists Lowest FDI among major LATAM economies (~$3.1B) Pipeline exists, but deployment remains limited Implications: Recovery still selective and project-driven Leadership Trends: Execution Over Expansion Organizations prioritizing: Operational discipline, capital efficiency, and leaders capable of managing automation-heavy environments The gap between capital and execution capability continues to widen Macro Reality: Stable, Not Accelerating Regional growth stabilizing around ~2–2.3% Tourism emerging as a relative bright spot (~4%+) -Bottom line: Opportunities remain concentrated—not broad-based -Executive Search Takeaways, Where mandates are forming: Mexico: Advanced manufacturing, industrial platforms Brazil: Tech, fintech, scalable platforms Regional: Infrastructure and energy -Most in-demand profiles: Execution-focused CEOs CFOs (capital allocation / efficiency) COOs (industrial scale, automation) Tech-enabled operators #elheadhunter DHR Global #DHRGlobal #executivesearch Sources: BNamericas, Renewables Now Ltd, Latam Republic, The Rio Times, OECD - OCDE, Promexico, Calder & Vale, PRODENSA

Unlocking the Potential of Mexico's Maquiladora Sector: Insights from a Headhunter In my 30 years as a Headhunter with expertise in the global manufacturing sector, I've observed firsthand the transformative potential of Mexico's maquiladora sector for international corporations. The maquiladora industry, characterized by its skilled workforce, proximity to the United States, and competitive costs, presents a golden opportunity for companies looking to establish export-oriented manufacturing operations. However, achieving "world-class" success in this complex sector requires a strategic approach, one that addresses common pitfalls and leverages the unique advantages of the region. A prevalent issue, as highlighted by a PwC report, is the lack of cultural understanding among global leaders. This gap often leads to misaligned strategies and inefficiencies in Mexican operations. To bridge this gap, leaders must immerse themselves in Mexican culture, engage with local teams, and tailor strategies to resonate with the local workforce. This alignment is crucial for the success of maquiladora operations and their ability to compete globally. Another challenge is the short-term focus on cost reduction, which can compromise long-term sustainability and competitiveness. Companies should adopt a long-term perspective, investing in talent development, quality systems, and process improvement to build a foundation for sustainable operations. The maquiladora sector also faces supply chain challenges, with higher logistics costs in Mexico compared to the OECD average. To enhance supply chain efficiency, companies should diversify their supplier base, partner with reliable local firms, and explore near-sourcing opportunities. Navigating the complex regulatory landscape in Mexico is another hurdle. Building a robust legal team and staying informed about legislative updates are essential steps to ensure compliance and protect the business from legal risks. Underinvestment in research and development is a common pitfall that limits innovation. Companies should leverage Mexico's talented workforce, collaborate with local institutions, and embrace new technologies to enhance their competitiveness in the export market. In conclusion, leading successful export-oriented manufacturing operations in Mexico requires cultural sensitivity, a long-term vision, and adaptability. By addressing these challenges and adopting strategic approaches, international corporations can unlock the full potential of Mexico's maquiladora sector and achieve sustainable success in the global market. #MaquiladoraSector #ExportOperations #GlobalManufacturing #InternationalBusiness #MexicoManufacturing #SupplyChainManagement #CulturalUnderstanding #LongTermStrategy #LogisticsCosts #RegulatoryCompliance #InnovationInManufacturing #SustainableBusiness #GlobalTrade #ExportMarketFocus #DataDrivenDecisions #ForbesRecognizedHeadhunters #topnotchfinders #sanfordrose

With zero warning, the Government of Mexico suddenly increased new tariffs on many apparel imports and imposed sweeping restrictions on the way in which apparel can use the IMMEX maquila program. While the Mexican Government was undoubtedly motivated by the best of intentions to protect its domestic textile and apparel industry, these abrupt changes will probably have the opposite effect. The trade and investment partnership between the U.S. and Mexican textile and apparel industries rest on two pillars: First, is the need to ensure predictability and stability so that companies can make and execute on long term plans. Second, is the need to ensure a commercially viable posture for a price-sensitive industry that faces severe competitive pressures from around the world. By injecting new tariff costs into a long-standing program, and by doing so with only a few hours’ notice, the Mexican Government just did its best to topple both of those pillars over. Mexico has now become more expensive and more unpredictable. This does not bode well for future trade and investment partnerships with the U.S. textile and apparel industry and its retail customers at a time when an increasingly chaotic sourcing environment and rising costs are doing battle with budget conscious consumers. What’s needed now – urgently before the damage becomes permanent – is for the Mexican Government to immediately pause these actions until it can fully consult with stakeholders on both sides of the border to determine the best course of action so that the US/Mexican industry can remain predictable and competitive, and so that trusted traders are treated like partners. https://lnkd.in/eTmhbBiG

⚡️Mexico, the gateway for China's EV manufacturing for US market ? • Back in 2020, Mexico decided to open the door wider to imports from China. A decree dropped import tariffs on cars from 20% to 0%, to give some Mexican car buyers access to low-cost EVs. • Chinese & Legacy Global Brand Mix.: The estimated 485,000 exports from China to Mexico in 2024 include products from >15 Chinese brands plus made-in-China vehicles from Ford, GM and VW China joint ventures. •  Powertrain Mix: Between 75-80% of vehicle exports from China to Mexico this year are gasoline-powered (ICE) vehicles. PHEVs ( BYD Shark pickup truck) & BEVs account for the balance. • Chinese Automaker Factories. Today, JAC Motors is the only Chinese automaker with an assembly operation in Mexico. What to watch: Will BYD build a plant in Mexico as promised – or not? https://lnkd.in/dXPAKqwW •  $13.6 bn invested in the Mexican auto sector during the Q1-Q3 of 2024. The main investing countries from Jan-Sept 2024 were: China (18.1%), Germany (14.8%), USA & Japan (10.3%), Korea 8.4%, Taiwan 5.2%, India 5.3%. Mexico: >2,200 auto plants (OEM, Tier 1/2/3) https://lnkd.in/dBZ_Aw7c • Mexico produces 3.5 million vehicles annually & 76% (~ 2.2 million cars ) goes to US. The investment from china to Mexico jumped 600% from 2019-2022. JAC, Chagan & Geely account for 20% EV market in Mexico. •USMCA, which underpins trade b/w 3 nations (US, Canada & Mexico), is up for review in 2026, w/ China’s present & future role in SC likely to be central. • VW plans to invests US$942 mn in Puebla for EV, in addition to earlier US$ 763.5 mn. In 2023, VW manu. ~349,000 vehicles in Mexico, 15.7% increase from 2022.: https://lnkd.in/dfnFbdgD • Mexico Set to Produce National EV, Olinia: https://lnkd.in/dcvaCyqZ • BYD & Tesla Pauses Mexico Factory Plans Until After US Election: https://lnkd.in/dTjutSsM Sources: • How China is setting up shop in Mexico: https://lnkd.in/dBgj5zxA • Interesting video discussion on, "Is China Manufacturing Electric Vehicles in Mexico?": https://lnkd.in/dr9ttRsg • How Chinese EVs Are Taking Over Mexico: https://lnkd.in/dG8miwWe • Why China is investing in Mexico? : https://lnkd.in/d25pyXrN • How China Uses Mexico To Avoid U.S. Tariffs? https://lnkd.in/dGHfcS-d • Driving Change: How EVs Are Reshaping China’s Economic Relationship with Latin America: https://lnkd.in/dxaVp5HK #emobility #automotive #jointventure #supplychain #battery #usa #china #marketshare #innovation #investment #trade #electrification #mexico

As we move through Q1 2025, Mexico’s investment surge in 2024 stands out, driven by the nearshoring trend as global companies optimize supply chains and shift away from distant offshore hubs. Mexico has solidified its position as a top investment destination, attracting a diverse range of projects in automotive, tech, and manufacturing across states like Durango, Jalisco, Guanajuato, Hidalgo, and even Tabasco—a notable shift from 2023. Industry leaders like Amazon (US$5B), Volvo (US$700M), and Audi (1B euros) highlight Mexico’s appeal as a nearshoring hub for North American and European firms, while Deacero (US$600M) and Yokohama (US$413M) strengthen its industrial core. From smaller ventures like QSM Semiconductores (US$3M) to billion-dollar commitments, these investments signal strong economic growth, job creation, and infrastructure gains, especially in regions tied to U.S. trade. With both dollar- and euro-based projects, Mexico’s 2024 performance reflects global confidence in its manufacturing strength and strategic location—though the impact of potential tariffs remains a key watchpoint. Check out MEXICONOW's infographic for a full list of 2024 investment announcements.