In 2023, Mexico exported $475 billion in goods to the United States, surpassing China for the first time in two decades. By the end of 2025, that figure had crossed $510 billion, and Mexico's share of total U.S. goods imports reached 16.2 percent — the highest level on record. The structural drivers behind this shift are now well understood: Section 301 tariffs on Chinese goods imposed from 2018 onward, the United States–Mexico–Canada Agreement's stricter rules of origin for automotive and electronics, pandemic-era supply chain shocks, and the bipartisan industrial policy embedded in the CHIPS and Science Act and the Inflation Reduction Act.
The real story, however, is not the headline trade number but the composition and geography of the underlying capital flows. Foreign direct investment in Mexico reached $36 billion in 2023 and $40 billion in 2024, with announced — though not yet realized — pipeline figures from the Mexican Ministry of Economy exceeding $110 billion across the 2024–2026 horizon. Roughly 60 percent of announced FDI is concentrated in five northern states: Nuevo León, Coahuila, Chihuahua, Tamaulipas and Querétaro. Monterrey alone has captured more than a third of new manufacturing capacity.
The sectoral pattern is consistent with what the literature on supply chain reorganization predicts. Auto and auto parts dominate, accounting for roughly 35 percent of new announcements, led by Tesla's continually delayed Santa Catarina gigafactory, BMW's San Luis Potosí expansion, and a wave of Chinese auto-parts suppliers — BYD, MINTH, Yanfeng — establishing Tier-1 facilities to qualify for USMCA regional content thresholds. Electronics, appliances and electrical equipment account for an additional 25 percent, with significant Korean (LG, Samsung) and Taiwanese (Foxconn, Quanta) commitments.
What is novel and politically sensitive is the role of Chinese capital. By our count, Chinese-affiliated firms accounted for approximately 19 percent of announced manufacturing investment in northern Mexico in 2024, up from less than 5 percent in 2019. The strategic logic is transparent: produce in Mexico to qualify for USMCA treatment and circumvent Section 301 tariffs on direct exports from China. The Office of the United States Trade Representative is acutely aware of this dynamic, and the 2026 USMCA joint review provides the institutional vehicle for tightening rules of origin and worker-based provisions to capture the loophole.
The Sheinbaum administration, which took office in October 2024, has navigated the resulting trilemma with more dexterity than markets expected. President Claudia Sheinbaum has publicly committed to maintaining USMCA's framework while pursuing a domestic 'Plan Mexico' designed to deepen local content in strategic sectors. The constitutional reforms inherited from the López Obrador administration — particularly judicial elections and the dissolution of autonomous regulatory bodies — created an initial wave of investor anxiety, reflected in the peso's depreciation from roughly 17 to 20 per dollar between mid-2024 and early 2025. The currency has since stabilized as institutional clarity improved.
Three operational risks dominate the current outlook. The first is U.S. trade policy. The second Trump administration's February 2025 imposition of 25 percent tariffs on Mexican imports — paused after negotiations on fentanyl and migration cooperation, partially reimposed sector-by-sector through 2025 — has made clear that USMCA does not provide unconditional protection against U.S. unilateralism. Manufacturers in Mexico now operate under a permanent risk premium reflecting the probability of episodic tariff actions, even where USMCA compliance is unambiguous.
The second is infrastructure. Nuevo León's water stress is now binding. Industrial parks in the Saltillo–Monterrey corridor have repeatedly cited water availability as the principal bottleneck on expansion, and the state's 2024 Plan Hídrico envisages roughly $4 billion in desalination, conveyance and treatment investment that is not yet financed. Power is the parallel constraint: CFE, the state electricity utility, faces a structural generation deficit in the north, and the recent constitutional changes that recentralize energy planning have raised the cost of private renewable additions.
The third is rule of law. Cargo theft, extortion of trucking operators, and the increasing visibility of organized criminal groups in legitimate logistics activity have raised security costs for industrial operators along the Bajío and northern corridors. Insurance premiums for inland transit have risen 30 to 45 percent over 24 months, and several Tier-1 automotive suppliers have begun routing higher-value shipments through additional escort and tracking layers.
Despite these risks, the nearshoring thesis remains structurally intact for three reasons. First, the wage differential — Mexican manufacturing wages remain roughly one-fifth of U.S. equivalents and competitive with coastal China after recent appreciation of the renminbi against the peso. Second, USMCA's automatic 2026 joint review extends the agreement's planning horizon to 2042 if the parties affirm continuation, providing a fundamentally different planning environment than the year-by-year uncertainty around U.S.–China commercial relations. Third, the U.S. industrial policy package — IRA tax credits, CHIPS Act subsidies, and the 2024 expansion of foreign-pollutant tariffs — has structurally reduced the long-run viability of pure Asian supply chains for U.S.-bound final goods.
For corporate strategy, three actions follow. Manufacturers should structure new Mexican investments to comply with the strictest plausible reading of USMCA rules of origin, not the current letter, anticipating tightening in the 2026 review. Treasury and procurement teams should diversify across at least two of the major Mexican industrial corridors — Bajío, Northeast, and Yucatán Peninsula — to mitigate water, power and security concentration risk. And board-level governance should incorporate a formal political risk overlay covering U.S. tariff probability, Mexican judicial reform implementation, and the trajectory of bilateral security cooperation.
Veritas Global Advisory's Americas Briefing will track USMCA review developments, FDI flows, and infrastructure financing in our quarterly Mexico Risk Index, with the next edition due in March 2026 ahead of the formal joint-review consultation window.
This research briefing is published by Veritas Global Advisory's editorial desks. Views expressed are those of the authors and do not constitute investment advice.