Challenges on the Nearshoring Path: Mexico as an Investment Destination in a Protectionist World
Donald Trump, since the beginning of his presidency, pursued a protectionist policy towards China as part of his ambitious goal of "Make America Great Again.
This policy involved the use of trade barriers, particularly tariffs on Chinese exports to the United States, and restrictions on American investments in China, especially in high-tech and military sectors. Despite Biden taking office, tensions between China and the United States persist due to concerns about China's threat to invade Taiwan and its support for Russia's invasion of Ukraine. As a result, Biden has also maintained trade and investment restrictions, maintaining a protectionist stance.
These policies have had an impact on US imports, with China losing market share in US imports, dropping from 20.7% in 2018 to 13.4% in the first five months of this year. Vietnam, India, Mexico, and Canada have gained some of that market share. However, despite Mexico's advantage of geographic proximity and a free trade agreement with the United States, foreign direct investment (FDI) has not significantly increased. This is due to three factors: lack of legal certainty, security concerns, and restrictive energy policies in Mexico, making the country less considered "friendly" for foreign investment.
In summary, while Mexico has the potential to benefit from the "nearshoring" phenomenon, factors such as lack of legal certainty, insecurity, and restrictive energy policies have prevented the country from attracting more foreign investment and becoming a more attractive destination for companies looking to relocate their operations from China to the United States.
El Economista. (2023, Agosto 28). Nearshoring. El Economista. https://www.eleconomista.com.mx/opinion/Nearshoring-20230828-0012.html