- Mexico introduced a range of tax incentives to promote nearshoring, including deductions for local and foreign companies, with enhanced benefits for technology and R&D.
- They plan to reduce imports from China and align more with the US and Canada to foster stronger trade ties and boost local manufacturing.
- If 10% of Chinese imports are replaced with North American production, Mexico’s GDP could grow by 1.2%, while the US and Canada would see 0.8% and 0.2% growth.
- Logistics companies like C.H. Robinson are expanding their footprint in Mexico, signaling continued interest in nearshoring, especially in manufacturing, warehousing, and logistics.
- Mexico’s government aims to increase public and private investment to more than 25% of GDP by 2030, fueling further industrial and infrastructural growth.
Mexico is doubling down on nearshoring with new tax breaks and incentives designed to attract foreign investment and reduce the country’s reliance on Chinese imports.
President Claudia Sheinbaum’s announcement is part of a broader strategy to align more closely with North America, particularly the US, and bolster Mexico’s manufacturing and logistics sectors.
The tax incentives will be available to both local and foreign companies, with special provisions for technology and research & development through 2030, per GlobeSt.
A Stronger Alliance
The Mexican government’s plan to promote nearshoring centers on reducing the country’s dependence on Chinese imports. The country has identified the shift to North American supply chains as a strategic priority.
Finance Minister Rogelio Ramirez de la O highlighted that replacing just 10% of Chinese imports with locally made goods in North America could boost Mexico’s GDP by 1.2%, while the US and Canada could see GDP growth of 0.8% and 0.2%, respectively.
In line with these goals, Mexico is offering tax deductions to encourage both local and foreign companies to invest in production within the country. They also want to grow public and private investment to more than 25% of GDP by 2030.
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Why It Matters
The push for nearshoring reflects a broader supply chain trend, with more companies looking to move manufacturing closer to home markets. The North American shift is gaining momentum in Mexico, which has become the US’s largest trade partner since China’s relations started sour.
Financial institutions like Bank of America (BAC) are optimistic about Mexico’s future, predicting significant revenue growth from institutional clients over the next five years.
Meanwhile, logistics companies like C.H. Robinson (CHRW) are investing heavily in warehousing and cross-dock facilities along the US-Mexico trade corridor.
What’s Next
Mexico’s ongoing focus on nearshoring and foreign investment could have significant implications for industrial real estate, particularly in manufacturing, logistics, and warehousing.
With more tax incentives and investment plans in the pipeline, Mexico is positioning itself as a critical hub for North American supply chains. Over the next few years, we can also expect more foreign companies to take advantage of these favorable conditions.
