Maihold, Gün he
Resea ch Repo
Mexico – F om a sho nea sho ing boom o US "secu i y-
sho ing"
SWP Commen , No. 23/2025
P o ided in Coope a ion wi h:
S i ung Wissenscha und Poli ik (SWP), Ge man Ins i u e o In e na ional and Secu i y A ai s,
Be lin
Sugges ed Ci a ion: Maihold, Gün he (2025) : Mexico – F om a sho nea sho ing boom o US
"secu i y-sho ing", SWP Commen , No. 23/2025, S i ung Wissenscha und Poli ik (SWP), Be lin,
h ps://doi.o g/10.18449/2025C23
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NO.
23
MAY 2025
In oduc ion
Mexico – F om a Sho Nea sho ing
Boom o US “Secu i y-sho ing”
Gün he Maihold
Wi h he econ igu a ion o in e na ional supply chains, Mexico has gained impo -
ance as a loca ion o new o eign in es men s. The coun y has been able o bene i
om nea sho ing, ha is, he eloca ion o se ices o p oduc ion p ocesses close o
consume ma ke s. This is associa ed wi h lowe logis ics cos s and o en be e manage-
men o supplie ela ionships. Howe e , his boom in in es men s has aba ed due
o a ious unce ain ies – no leas being Washing on’s h ea s o aise a i s, which
bu dens he economic p ospec s associa ed wi h nea sho ing. Mexican P esiden
Claudia Sheinbaum is a emp ing o coun e his end, bu in iew o he inc easingly
u gen demand by he Uni ed S a es o hi d coun ies o adop an an i-Chinese
cou se, Mexico is a isk o being caugh in he ap o “secu i y-sho ing” and losing
i s au onomous oom o manoeu e. This is al eady o cing Mexico – as well as i s
economic pa ne s who ha e in es ed he e – o ealign hei p oduc ion p ocesses.
US P esiden Donald T ump ini ially im-
posed a i s o 25 pe cen on Canadian
and Mexican expo s o he Uni ed S a es
in ea ly Feb ua y based on he In e na ional
Eme gency Economic Powe s Ac (IEEPA), hen
exemp ed ehicles p oduced in Mexico and
Canada ha a e deli e ed o he Uni ed
S a es om he a i s. Days la e he pos -
poned he implemen a ion o he a i s
on almos all goods o ou weeks un il
2 Ap il. On his “Libe a ion Day”, Mexico
was no – unlike coun ies wo ldwide –
subjec o a gene al a i a e o 10 pe
cen . The exemp ion applies o all p oduc s
ha comply wi h he ee ade ag eemen
known as he Uni ed S a es–Mexico–
Canada Ag eemen (USMCA). Goods beyond
ha a e subjec o di e en a i a es.
The announcemen o blanke a i s on
impo ed s eel and aluminium by P esiden
T ump has had a wide ange o e ec s.
Abo e all, i uels a clima e o unce ain y
among all economic ac o s, as hey canno
ely on s able amewo k condi ions in
he medium e m. Legally, T ump used an
eme gency o de as he basis. I s ac i a ion
was jus i ied by e e encing he g ow h in
he smuggling o he designe d ug en anyl
in o he Uni ed S a es, and he pe sis en ly
powe ul ole o o ganised c ime in he
neighbou ing coun y. P esiden Sheinbaum
p omised o deploy 10,000 soldie s o
SWP Commen 23
May 2025
2
Mexico’s no he n bo de o s em he in lux
o d ugs and undocumen ed mig an s. In
addi ion, 29 leade s in he d ug ade ha e
been a es ed and ex adi ed o he Uni ed
S a es. Howe e , hese measu es ha e no
succeeded in e e sing he imposed ac ions.
The dis up ions associa ed wi h hese
unce ain ies a ec bo h ade and in es -
men s, which a e o cen al impo ance
o Mexico due o i s a ou able p oduc ion
condi ions (especially low wages) and we e
he main eason ha he coun y o e ook
China in 2023 as he mos impo an ad-
ing pa ne o he Uni ed S a es.
The p o ec ionism being pushed by
T ump is ha ing a majo impac on Mexico’s
bila e al ela ions wi h he Uni ed S a es,
and will con inue o do so o he o esee-
able u u e. Fu he mo e, he T ump ad-
minis a ion has in e wined ade, mig a-
ion, and secu i y policy issues – a ac ic
ha uns coun e o he e o s o he Mexi-
can go e nmen o keep hese policy a eas
sepa a e and nego ia e hem acco ding o
hei espec i e logics. The USMCA, which
was nego ia ed du ing he i s T ump ad-
minis a ion and came in o o ce in July
2020 wi h Mexico and Canada as US pa -
ne s, p o ided he app op ia e amewo k
o his. Howe e , he u u e o his ag ee-
men , which is o be e iewed in 2026, is in
ques ion since unila e al a i dec ees ha e
unde mined i s alidi y. The Mexican au o-
mo i e indus y is being hi pa icula ly
ha d by he a i s. T ade in mo o ehicles
accoun s o 22 pe cen o o al goods a -
ic unde he ag eemen and is hus consid-
e ed he mos c i ical sec o . O he 3.98 mil-
lion ehicles p oduced in Mexico in 2024,
3.47 million we e expo ed ab oad, unde -
lining Mexico’s impo ance as a key hub o
he sec o .
Nea sho ing is an economic
oppo uni y o Mexico
Due o i s s a egic geog aphic loca ion, i s
ime zone, and he a ailabili y o labou ,
Mexico has become an inc easingly a ac-
i e loca ion o companies seeking o im-
p o e e iciency and educe cos s. Agains
he backd op o he end o eloca e com-
panies o segmen s o p oduc ion – such
as manu ac u ing s ages o equipmen
con igu a ions – om Asia o Mexico,
he Mexican go e nmen hoped ha hese
compe i i e ad an ages would a ac sig-
ni ican amoun s o new indus y o he
coun y. Wi h he econ igu a ion o in e -
na ional supply chains ollowing he shi
away om China, Mexico was expec ed o
become he main bene icia y o new o eign
in es men s. In 2023, he coun y achie ed
a eco d high US$36.06 billion in o eign
di ec in es men (FDI). Fo he sou he n
neighbou o he Uni ed S a es, he nea -
sho ing boom hus ep esen s a his o ic op-
po uni y ha may no e u n o decades.
By eloca ing business p ocesses o a nea by
coun y, nea sho ing o e s nume ous
ad an ages such as geog aphic p oximi y,
cul u al alignmen , and cos sa ings.
In Mexico, he e is hope ha he coun y
can use he ailwind o he nea sho ing
end o ansi ion om being me ely a p o-
duc ion si e o becoming an inno a ion hub.
The ongoing ade con lic be ween he
Uni ed S a es and China – and he a i
inc eases imposed by he Biden adminis-
a ion on impo s om China – ha e
been in e p e ed in Mexico as an addi ional
incen i e o companies o seek p oximi y
o he US ma ke . E en Chinese i ms ha e
decided o eloca e ope a ions o Mexico in
o de o con inue expo ing o he Uni ed
S a es and he eby ci cum en he high
a i s. Be ween 1 Janua y 2023, and Augus
2024, mo e han 400 in es men p ojec s
wi h a o al olume o US$170 billion we e
announced; P esiden Sheinbaum has since
e en men ioned a igu e o US$200 billion.
Nea sho ing has become a new op ion o
Mexico, as i is c i ical o he g ow h o
ce ain s a egic sec o s ( eal es a e, au o-
mo i e, echnology). The boom had al eady
begun o ake shape in 2022, when in es -
men plans o alling mo e han US$9 bil-
lion we e announced. A yea la e , ca -
make Tesla e ealed plans o build a new
ac o y in Mexico, wi h p ojec ed cos s o
a ound US$5 billion.
SWP Commen 23
May 2025
3
Bu his nea sho ing boom came o a
sudden hal in 2023: Al hough Mexico
egis e ed he a o emen ioned eco d
in low o FDI in he same yea , he sha e o
new in es men s only eached he second-
lowes le el since 2006, he yea when he
Minis y o Economy began publishing
in es men da a. The calcula ed US$4,817
billion accoun ed o jus 13 pe cen o
o al FDI in 2023. In he p e ious yea , his
igu e had been US$18,147 billion, ep e-
sen ing 50 pe cen o all in es men s. As
a esul , he p oduc i i y, compe i i eness,
inno a ion, and employmen boos ha
he go e nmen had hoped o ailed o
ma e ialise. Finally, in July 2024, Elon Musk
also pu he announced cons uc ion o
he Tesla ac o y on hold, so he expec ed
signalling e ec o ha in es men did no
mani es ei he . Consequen ly, inancial
commi men s in he s eel and aluminium
indus ies – which we e in ended o low
in o ca body p oduc ion – we e also called
in o ques ion; o he supplie s likewise
s epped on he b akes.
The puni i e a i s om Washing on,
which a e ha ing cumula i e e ec s pa -
icula ly in he au omo i e sec o , a e ci ed
as possible easons why in es o s a e pos -
poning – o e en en i ely wi hd awing –
hei p e iously announced in es men
commi men s. Addi ional ac o s include
he coun y’s well-known de ici s in ene gy
and wa e supply, an opaque judicial
e o m ha includes he di ec elec ion o
judges by he popula ion, inadequa e law
en o cemen , and an uns able secu i y
si ua ion h oughou he coun y – issues
ha ha e no been esol ed, despi e ecen
successes in app ehending key ca el leade s
and ex adi ing hem o he Uni ed S a es.
While some US ca make s such as GM,
Fo d, and S ellan is epo edly ha e unused
capaci y in he Uni ed S a es o ma ginally
inc ease domes ic p oduc ion, he majo i y
o co po a ions s ill iew Mexico as indis-
pensable o main aining hei p oduc
o e ings on he US ma ke . Thei p essu e
was likely a key eason why he ini ially
announced 25 pe cen a i s we e sus-
pended o one mon h.
A emp s o escue he
nea sho ing e ec
In Mexico, he e is g owing conce n ha
he eage ly an icipa ed nea sho ing bubble
could bu s . Declining igu es o comme -
cial p ope y en als seem o indica e ha
his is al eady happening. As a esul , he
Mexican p esiden is making e o s o
e i e nea sho ing. She aims o a ac o -
eign in es men s o alling US$277 billion.
Rhe o ically, she is elying on a adi ional
line o a gumen : ha he ime has come
o Mexico o join ly ushe in a new phase
o economic de elopmen . As he neigh-
bou o he wo ld’s la ges economy, he
coun y is in a unique posi ion o bene i
om nea sho ing – in he e minology o
he Biden adminis a ion, “ iendsho ing” –
in a wo ld whe e he Uni ed S a es–China
i al y is eshaping in es men decisions
and supply chains. Ye his discou se does
no e lec he new eali y: The T ump
adminis a ion seems o ha e no “ iends”,
and i s “Make Ame ica G ea Again” objec-
i es con adic such no ions. In a ime o
apid geopoli ical and geoeconomic shi s
and g owing scep icism owa ds globalisa-
ion, Mexico can only bene i i in e na ion-
ally ope a ing companies a e able o coun
no only on op imised supply chains and
lowe ope a ing cos s, bu also on s able
amewo k condi ions. E en i he e ec s o
he US a i s a e empo a y, he unce ain y
may pe sis longe – especially i he Uni ed
S a es and Mexico ail o each a consensus
on sensi i e issues ha a e expec ed o be
add essed in 2026 du ing he enego ia ion
o he ila e al USMCA.
These mani old unce ain ies a e al eady
a ec ing Mexico’s economic momen um.
E en be o e P esiden T ump’s e u n o
o ice, he In e na ional Mone a y Fund (IMF)
p edic ed ha he Mexican economy would
g ow by only 1.5 pe cen in 2024 and 1.3
pe cen in 2025 – igu es ha a e clea ly
below he La in Ame ican a e age o 2.1
and 2.5 pe cen , espec i ely. In Ap il, he
IMF p ognos ica ed ha Mexico’s economy
would con ac by 0.3 pe cen in 2025, a
signi ican downwa d e ision o 1.7 pe -
SWP Commen 23
May 2025
4
cen age poin s om i s Janua y o ecas .
In ligh o he unp edic abili y esul ing
om ongoing a i and ade policy de el-
opmen s, he O ganisa ion o Economic
Co-ope a ion and De elopmen has e ised
i s o ecas o Mexico’s g ow h down o 1.3
pe cen in 2025 and 0.6 pe cen in 2026.
Nea sho ing is in decline.
A on al a ack by T ump and he Re-
publicans on Chinese p oduc ion in Mexico
could exac a u he oll, especially i cu -
ency isks inc ease Mexico’s deb se ice
bu den. Reduced in es men s and expo s
due o he unce ain y – especially in
o eign ade ( a i s), he unsecu e low
o emi ances (due o he depo a ion o
Mexican na ionals om he Uni ed S a es
and he impac o a emi ance ax), and
a decline in ou ism (due o he h ea o
c iminal iolence) – could u he dimin-
ish capi al in lows in o he coun y.
In esponse, a he beginning o he yea ,
he Mexican p esiden sough o gi e nea -
sho ing a esh impe us by launching a
package o ax incen i es o p omo e he
es ablishmen o o eign companies in
Mexico. This ex ended a dec ee ha is now
se o emain in e ec un il he end o
2030. Acco ding o he dec ee, ax bene i s
will be g an ed in he o m o immedia e
deduc ions o he pu chase p ice o new
ixed asse s and addi ional deduc ions o
expenses ela ed o wo ke aining. These
bene i s can be claimed bo h by companies
al eady ope a ing in Mexico and by hose
planning o se up ope a ions he e. The
objec i e o ex ending hese ax incen i es,
acco ding o he dec ee, is o p omo e
in es men in Mexico and enhance co -
po a e p oduc i i y. Added o his a e ax
elie measu es – mainly educ ions in uel
axes, income ax, and alue-added ax –
ha apply in he no he n and sou he n
bo de egions.
Plan México –
a p e en i e p og amme
On 13 Janua y 2025, P esiden Sheinbaum –
in a a e show o uni y wi h ep esen a i es
o he p i a e sec o – p esen ed “Plan
México” as a long- e m amewo k o e-
aligning he coun y, especially in ligh
o inc easingly complica ed ela ions wi h
he Uni ed S a es. The p og amme aims o
ake he wind ou o he sails o sanc ions
agains Mexico ollowing he inaugu a ion
o T ump by making he coun y less
dependen on Chinese impo s and, a he
same ime, wo king o shield i mo e e ec-
i ely om T ump’s economic p io i ies.
Ini ially, he plan was abo e all a call o
calm – issued one week be o e P esiden
T ump’s inaugu a ion. Since hen, he go -
e nmen – emboldened by i s demons a-
i e alliance wi h he business sec o – has
endea ou ed o cha a clea cou se ha is
guided by he maxim o p ese ing na ional
so e eign y and cha ac e ised by o de and
p udence in an icipa ion o u bulen imes
ahead.
The plan aims o educe dependency
on China and inc ease he sha e o No h
Ame ican con en in ade, in acco dance
wi h he ules o o igin in he USMCA.
Fu he mo e, i seeks o aise he domes ic
olume o p oduc s expo ed o he Uni ed
S a es. To achie e his, he s a e wan s o
p omo e echnological inno a ion wi hin
domes ic indus y while simul aneously
p o iding a ge ed incen i es ac oss di e -
en egions by es ablishing so-called de el-
opmen hubs wi h indus ial pa ks and
esea ch ins i u ions.
Ul ima ely, he plan is a na ional indus-
ialisa ion s a egy wi h se e al objec i es:
o p o ec Mexican wo ke s, ensu e ai
ade, p omo e mo e locally and egionally
o ien ed p oduc ion wi h highe alue
c ea ion, and deepen egional in eg a ion.
A key aim is o s eng hen he compe i i e-
ness o domes ic indus y wi hin he local
and egional ma ke s and o ad ance im-
po subs i u ion by expanding na ional
alue chains. This is in ended bo h o c ea e
new jobs and o add ess egional imbalances
in he coun y’s economic de elopmen .
Cu en ly, jus 4 o Mexico’s 32 ede al
s a es accoun o nea ly 40 pe cen o he
coun y’s g oss domes ic p oduc (GDP).
This imbalance is o be add essed h ough
SWP Commen 23
May 2025
5
an ambi ious public in es men p og amme
in wa e and elec ici y supply. The same
applies o oad in as uc u e, which is o
be made sa e in ligh o ongoing a acks
by d ug ca els. The o e a ching goal is o
inc ease na ional inpu , quickly expand he
domes ic p oduc ion pla o m, and boos
in es men . The ac ha hese plans we e
p esen ed unde he heading “Impo Sub-
s i u ion” du ing he launch o Plan México
makes i clea ha impo s om China a e
a speci ic a ge – especially hose in ol -
ing he supply o au o pa s and accesso ies
o Mexico’s au omo i e sec o .
Among he plan’s 13 goals, he aspi a-
ion o ele a e he coun y om he wo ld’s
wel h-la ges o he en h-la ges economy
– su passing Aus alia and Sou h Ko ea –
s ands ou . This is o be achie ed p ima ily
by aising he in es men sha e o GDP o
mo e han 25 pe cen and c ea ing 1.5 mil-
lion new jobs by 2030. Pa icula ly in he
sec o s o ex iles, oo wea , u ni u e, and
oys, he aim is o 50 pe cen o in-coun y
demand and consump ion o be me h ough
domes ic p oduc ion. O e all, Mexico’s
alue-added sha e is o inc ease by 15 pe
cen . In public p ocu emen as well, 50 pe
cen o expendi u es a e o be sou ced om
domes ic p oduc ion. These ambi ious a -
ge s a e complemen ed by co esponding
benchma ks o educa ion, he pha ma-
ceu ical sec o , and ou ism; u he meas-
u es include egula o y simpli ica ion o
businesses and inancing oppo uni ies o
small and medium-sized en e p ises.
The app oach unde lying he economic
de elopmen plan also includes elemen s
aimed a add essing c i icism being oiced
in Canada ega ding Mexico se ing as a
backdoo o Chinese goods. Fo ins ance,
Doug Fo d, he P emie o On a io, which is
Canada’s la ges p o ince, p oposed exclud-
ing Mexico om he USMCA. One o he
co e p io i ies o Plan México is he esho -
ing o p oduc s in o Mexican p oduc ion
ha we e impo ed om ab oad – espe-
cially China – o e he pas decades. I jus
10 pe cen o Chinese expo s o No h
Ame ica we e eplaced by egional p od-
uc s, Mexico’s GDP would inc ease by 1.2
pe cen , he Uni ed S a es’ by 0.8 pe cen ,
and Canada’s by 0.2 pe cen . I is e iden
ha Washing on, oo, will demand a di e -
en app oach owa ds China when he ee
ade ag eemen is up o e iew, in 2026 a
he la es .
Despi e he ambi ious goals o Plan
México, he e a e doub s ega ding i s im-
plemen a ion. One ques ion is how he
necessa y capi al will be mobilised in iew
o Mexico’s limi ed public inances, pa icu-
la ly gi en he expec a ion o declining in-
es men in e es om ab oad. Ano he
challenge is ha he ime ho izons o he
in ended ans o ma ion o he na ional
p oduc ion pla o m may no align wi h he
poli ically an icipa ed sho - e m s ee ing
e ec s, making i unlikely ha he e will
be obse able impac s in he nea u u e.
F om “ iendsho ing” o
“secu i y-sho ing”
The Biden adminis a ion had amed i s
concep o geopoli ical eo de ing unde
he mo o o “ iendsho ing”. I ecom-
mended shi ing supply chains away om
China owa ds us ed coun ies. This was
in ended o con inue ensu ing ee ma ke
access and educe isks o he US economy
as well as o closely aligned ading pa -
ne s. By highligh ing ce ain pa ne s such
as Mexico – due o hei iden i ica ion
wi h US alues – he concep o nea sho -
ing was imbued wi h a s ong no ma i e
dimension. This became e iden as ea ly
as 2022, when he Biden adminis a ion
launched i s compe i ion wi h China h ough
h ee legisla i e measu es: he In la ion
Reduc ion Ac , he CHIPS Ac , and he In a-
s uc u e In es men and Jobs Ac . These
measu es ini ially ocused on ou global
alue chains: semiconduc o s, la ge ba -
e ies, c i ical mine als and me als, as well
as pha maceu icals and pha maceu ical
chemicals.
Now, he second T ump adminis a ion
has aken a mo e agg essi e app oach
o supply chain policy, subo dina ing he
Uni ed S a es’ in e na ional ela ions wi h
SWP Commen 23
May 2025
6
China o i s own na ional secu i y and
domes ic poli ical in e es s. Nea sho ing is
hus losing i s dis inc ion as a seemingly
neu al s a egy o eloca ing p oduc ion
om Asia o Mexico; ins ead, Washing on
has placed na ional secu i y in e es s abo e
all else in i s dealings wi h China. As a
esul , Mexico uns he isk o being caugh
be ween he g inding s ones o he wo
g ea powe s in i s economic ela ions.
Mexican economis En ique Dussel Pe e s
he e o e ecommends using he e m
“secu i y-sho ing” o desc ibe he s a egy
being p ac iced by he Uni ed S a es. This,
he a gues, be e e lec s he ac ha
Washing on is pu suing i s in e es s agains
China using a wide a ay o ools and meas-
u es. The sys emic i al y and con on a-
ion be ween he Uni ed S a es and China
mean ha hi d coun ies mus adop spe-
ci ic measu es o comply wi h g owing US
p essu e o ollow i s lead. Thi d coun ies
and egional blocs a e hus being d awn
in o he speci ic measu es ha Washing on
is p oposing – such as in he a eas o ade
and FDI – acco ding o US na ional secu-
i y conside a ions, wi hou being able o
exe cise hei own s a egic op ions.
In his con ex , a Chinese company’s
in es men in Mexico is no longe seen as a
cle e nea sho ing mo e o gain access o
he US ma ke , bu a he as a po en ial isk
o conce n in a cos ly geopoli ical con on-
a ion be ween supe powe s. The Uni ed
S a es is pu ing p essu e on hi d coun ies
o adop US ules and ins umen s o limi
engagemen and coope a ion wi h China –
o he wise, he e will be a p ice o pay, such
as highe cos s o access o he US ma ke
o e en comple e exclusion om i .
This exac policy om Washing on is
cu en ly Mexico’s g ea es conce n – one
i seeks o p e en in hese challenging
imes o global ee ade. Howe e , Mexi-
co’s e o s a e cu en ly being hampe ed
by wo de elopmen s: he igh ening o
he US “secu i y-sho ing” s a egy, which
is accompanied by a iangula ion o ade
policy be ween China, he Uni ed S a es,
and Mexico; and a decline in FDI. By ele a -
ing ade and in es men decisions in hi d
coun ies o a ma e o US na ional secu-
i y, hey a e la gely emo ed om na ional
decision-making and bila e al ela ions.
Mexico’s e o s o main ain a consensual
bila e al ela ionship wi h he Uni ed S a es
hus a e leading o a con on a ion, which
Mexico’s p esiden is ying o a oid.
A la ge po ion o Mexico’s economic
policy is he e o e placed om he ou se
in o a iangula ade sys em be ween he
Uni ed S a es, China, and i sel , in which
geopoli ical conside a ions gain cen al im-
po ance. Bu he e ec s o US policy go a
beyond his: The Uni ed S a es’ e o s o
decouple om China in ecen yea s ha e
unde mined ins i u ions and egula o y
amewo ks such as he Wo ld T ade O ga-
niza ion, along wi h he associa ed p in-
ciples o ecip oci y and mos - a ou ed-
na ion ea men .
The US go e nmen has announced
plans o es ablish a componen -le el p o-
cedu e o ce i y he US con en o au o
pa s, so ha he 25 pe cen a i will
apply only o he alue o hei non-US con-
en . This means ha au o pa s complian
wi h he USMCA will emain exemp om
a i s un il he US Sec e a y o Comme ce –
oge he wi h US Cus oms and Bo de P o-
ec ion – in oduces a p ocedu e o apply-
ing a i s o hei non-US con en .
Ou look: Mexico’s economy and
i s in e na ional in es men and
ade pa ne s a a u ning poin
I Mexico wan s o main ain i s posi ion as
he Uni ed S a es’ mos impo an ading
pa ne beyond 2023, i will ha e o in e-
g a e ewe and ewe Chinese alue-added
componen s in o i s expo s o he Uni ed
S a es – o he wise, i isks acing a i s
unde he T ump adminis a ion. Some o
he measu es included in P esiden Shein-
baum’s Plan México p eemp i ely add ess
hese po en ial consequences o “secu i y-
sho ing” in an e o o disa m such accu-
sa ions om he US p esiden be o e hey
a ise. Howe e , his adap a ion comes a a
high cos o he Mexican go e nmen . I
SWP Commen 23
May 2025
7
mus signi ican ly inc ease public in es men
in he a eas o ene gy gene a ion, wa e
supply, anspo , and educa ion. In doing
so, he p esiden is p ima ily elying on con-
ibu ions om he p i a e sec o , which
has a leas e bally o e ed he i s suppo .
Gi en Mexico’s massi e ade de ici
wi h China (US$62.7 billion in 2023) –
which is mo e han o se in alue by i s
o eign ade su plus wi h he Uni ed S a es
(US$152 billion in 2023) – po en ial ade
es ic ions by he US go e nmen could
se iously jeopa dise Mexico’s es ablished
“business model”. This explains P esiden
Sheinbaum’s in e es in eplacing Chinese
impo s wi h domes ic p oduc s o achie e
g ea e independence om China. A he
same ime, his would also educe he Mexi-
can go e nmen ’s ulne abili y o a acks
om Washing on wi hin he amewo k o
“secu i y-sho ing”, e en i he es uc u ing
p ocesses only yield esul s in he medium-
o long e m.
Subs i u ing Chinese au o pa s – which
is pa icula ly impo an o expo goods
in he au omo i e indus y – wi h domes-
ic p oduc s is likely possible only o a e y
limi ed ex en , especially since many im-
po s, pa icula ly componen s o he au o-
mo i e indus y, ope a e h ough in a-
company ade. Bo h P esiden Sheinbaum
and he p edecesso , López Ob ado , ha e
epea edly emphasised ha Mexico does no
wish o se e as a “sp ingboa d” o Chinese
expo s o he Uni ed S a es.
I emains unce ain as o whe he he
enewed in e es in Mexico as a nea sho ing
loca ion will p o e sus ainable, and whe he
he associa ed hopes – such as hose oiced
by in e na ional inancial se ices p o ide
J.
P. Mo gan in July 2023, when i decla ed a
“New Mexican Momen ” – will be ul illed.
Since ha ime, momen um has declined
conside ably, and Mexico is acing inc eas-
ing p essu e due o he secu i y and ade
in e es s o i s no he n neighbou . This
could lead o he nea sho ing expec a ions
being quickly su oca ed by he iangula
logic o “secu i y-sho ing”. In e na ional
in es o s who ha e hus a aken ad an-
age o Mexico’s posi ion as an ex ended
wo kbench o he Uni ed S a es would also
be a ec ed.
P esiden Sheinbaum’s Plan México
add esses some o he an icipa ed challenges,
bu i s success depends on sca ce public
esou ces and he coun y’s ongoing in e -
nal secu i y issues. Only a sus ainable s a -
egy aimed a imp o ing compe i i eness
can help he coun y seize he hoped- o
“momen ” and place Mexico on a new pa h
o g ow h. This will ha dly be achie able
wi hou new o eign in es men . The e o e,
in addi ion o he p essu e exe ed by he
Uni ed S a es, he Mexican go e nmen
mus also do i s homewo k i he coun y
is o ansi ion o esilien supply chains.
The ime o begin making hose changes is
now. O he wise, he e iew o he USMCA
in 2026 by he h ee No h Ame ican coun-
ies will b ing a di icul econ igu a ion
o ade ela ions.
Fo he Ge man au omo i e indus y –
which elies hea ily on Mexico o i s US
ope a ions – hese de elopmen s ep esen
ano he signi ican blow. Al hough i mo es
in he slips eam o i s Ame ican compe i-
o s and migh bene i om hei lobbying
e o s, his would only be he case i he
esul ing exemp ions a e no limi ed o US-
based i ms. Fo Audi and Po sche, which
ha e no p oduc ion acili ies in he Uni ed
S a es, ehicle sales om hei Mexican
plan s in o he no he n neighbou ing
coun y could be subjec o massi e p ice
inc eases, and he eby su e declining sales.
BMW, which has been ac i e in Sou h Ca o-
lina and p oducing ce ain model se ies in
a plan in San Luis Po osí since 2019, would
see a po ion o i s US ma ke o e ings
a ec ed. Fo Volkswagen, he e ec on ce -
ain p oduc lines would be e en mo e
p onounced. Me cedes, oo, would incu
signi ican addi ional cos s o uck models
due o ce ain d i e sys ems and componen s
p oduced in Mexico.
Gi en he complexi ies o he espec i e
supply chains, a sho - e m eloca ion o
p oduc ion acili ies appea s economically
un iable. Much will he e o e depend on a
gene al egula o y solu ion ha would need
o be ag eed upon in he cou se o he
SWP Commen 23
May 2025
8
USMCA e iew nego ia ions. Wi hou such
p edic able ounda ions, s abilising Mexi-
co’s ole in he ne wo k o in e na ional
supply chains – especially in he s a egic
au omo i e sec o – will ha dly be success-
ul and only lead o a decline in he olume
o p oduced and expo ed ehicles in he
u u e. Only i he h ee pa ies ail o ind
a nego ia ed solu ion will i be possible o
gauge he ull ex en o he po en ial cos s
o “secu i y-sho ing” o economic ac o s.
P o . D Gün he Maihold is a Non-Residen Senio Fellow a SWP. This pape was de eloped as pa o he
p ojec Sus ainable Global Supply Chains, which is unded by he Fede al Minis y o Economic Coope a ion
and De elopmen (BMZ).
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unde CC BY 4.0
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Ge man Ins i u e o
In e na ional and
Secu i y A ai s
Ludwigki chpla z 3–4
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ISSN (P in ) 1861-1761
ISSN (Online) 2747-5107
DOI: 10.18449/2025C23
(English e sion o
SWP-Ak uell 15/2025)
