Over the last three years, nearshoring to Mexico has been marked by the arrival and expansion of Asian and European investments seeking to leverage trade agreements between Mexico, the United States, and Canada. According to SE data, from 2020 to 2023, investments in Mexico from Asian and European countries grew the most, with 52% and 72% increases in these regions.

Specifically, in the machinery industry, government data indicates a prevalence of Chinese and U.S. imports, with most of the machinery arriving in and produced in Mexico ultimately destined for the U.S. This suggests that U.S. and Chinese companies have been relocating to Mexico to cut operational costs, taking advantage of lower labor costs and tax and tariff benefits while keeping their commercial operations close to the world's largest consumer market.

By analyzing the behavior of imports and exports, we can clearly see how nearshoring works in North America.

On the import side, Chinese machinery imports to Mexico in 2023 accounted for 29% of the total machinery import value during that period. Close behind were U.S. imports, with 28%. Interestingly, another 26% of machinery imports came from Asian countries like Taiwan, South Korea, Malaysia, and Japan. In other words, over half of machinery imports into Mexico come from Asia. The remaining 17% is divided among European, American, African, and Oceanian countries.

A primary incentive for Asian companies to establish operations in Mexico is to reduce supply chain risks, particularly in transportation, and to avoid trade restrictions. This is especially relevant for Chinese companies, which, due to tensions with the U.S., face additional tariffs, port delays, and stricter customs inspections.

On the export side, in 2023, 90% of machinery sales produced or marketed in Mexico ended up in the U.S. This volume is equivalent to a third of Mexico's total export mass in 2023.

SiiLA's analysis also indicates that between 2021 and 2023, the value of Mexico's machinery exports to the U.S. rose by 31%, a sharper increase than in the previous four three-year periods. This coincides with the company relocation process triggered by the pandemic. A similar trend can be seen in machinery imports, whose economic volume increased by 32% between 2021 and 2023 after three three-year periods of growth, but with a moderate non-linear deceleration trend since 2010 that worsened between 2019 and 2020, amidst trade tensions between China and the U.S. starting in 2018.

This scenario implies at least two things: nearshoring is a natural extension of the commercial proximity that has been strengthening between Mexico and the U.S. over the last 40 years, and the temporary realignment of supply chains, exacerbated by trade issues in Asia, especially in China, has consolidated Mexico as a manufacturing production and distribution hub, such as machinery, in North America.

For more information on investment trends in Mexico, explore SiiLA REsource or contact us at contacto@siila.com.mx.