Introduction: Regional Winners and Losers in Global Trade

Over the past two decades, globalization and trade liberalization have reshaped Mexico’s economy. Yet, as the World Bank points out, these shifts have not been uniform across the country. Some regions — particularly the North and Bajío — have emerged as clear winners, attracting industries, jobs, and investment linked to international trade and the rise of nearshoring in Mexico.

According to Román David Zárate, economist at the World Bank’s Trade and International Integration Research Group, the distribution of industries has created “winners and losers” in Mexico’s regions. While the North and Bajío are thriving, other areas remain less integrated into global value chains.

Nearshoring and Regional Growth

The North: Manufacturing Powerhouse

Mexico’s northern states — from Nuevo León to Chihuahua — have long been closely tied to the U.S. economy due to their geographical proximity. The region has benefited from decades of integration in industries such as:

• Automotive manufacturing
• Aerospace production
• Electronics and semiconductors

Advanced logistics

This industrial base made the North the natural entry point for nearshoring in Mexico, as companies sought to relocate production closer to the U.S. market to reduce risks and costs.

The Bajío: Mexico’s Emerging Industrial Heartland

The Bajío region — including Guanajuato, Aguascalientes, Jalisco, Querétaro, and San Luis Potosí — has become another hotbed of investment. Data from Mexico’s National Institute of Statistics and Geography (INEGI) shows that this corridor alone accounts for over one-third of the country’s total production of transportation equipment, led by the automotive sector.

Clusters of suppliers, skilled labor, and strong logistics links have positioned the Bajío as a top destination for companies seeking to integrate into regional supply chains under USMCA (T-MEC).

The Tariff Risk: Short-Term Pain

While nearshoring has strengthened Mexico’s economy, risks remain. One of the most significant threats is the potential imposition of tariffs by the United States.

Zárate noted that the introduction of a 25% tariff on steel and aluminum has already had a negative effect on Mexico’s GDP, with early estimates suggesting a potential 3% loss in GDP over the next two to three years.

Uneven Regional Impacts

The impact of tariffs will not be uniform:

• Northern states may initially withstand the pressure better due to strong construction activity and the relocation of companies.
• Southern states — already less industrialized — could face deeper slowdowns.

This underscores the regional disparities within Mexico’s economy and the importance of diversifying industrial growth beyond the North and Bajío.

Mexico’s Central Bank Perspective

The Bank of Mexico (Banxico) is closely monitoring these developments. During the release of its Regional Economies Report, Alejandrina Salcedo, Director of Economic Research, emphasized that tariff uncertainty is affecting business decision-making, particularly regarding investment.

Banxico conducts regular surveys with regional businesses to assess the impact of nearshoring and trade risks. Findings since mid-2023 show that while nearshoring has positive effects in the north and central-south regions, uncertainty over U.S. policies is slowing the pace of new commitments.

The Integration of North American Supply Chains

Despite challenges, Mexican officials and economists remain optimistic about the future of regional integration.

Salcedo highlighted that Mexico’s economic integration with the U.S. has been “very close for many years” and is unlikely to unravel, even with temporary trade disputes. Supply chains in industries like automotive, aerospace, and electronics are so deeply intertwined that North American production integration will continue.

This gives Mexico a structural advantage: companies relocating production from Asia cannot ignore Mexico’s proximity, trade agreements, and industrial ecosystems.

Regional Disparities: A Two-Speed Economy

The Dynamic North and Bajío

Attract the majority of foreign direct investment (FDI).

Benefit from infrastructure, logistics, and skilled labor.

Show resilience even under tariff pressures.

The Lagging South

Faces challenges in attracting large-scale manufacturing.

More vulnerable to external shocks and weaker investment flows.

Relies more heavily on government-led infrastructure programs like the Interoceanic Corridor.

This imbalance raises questions about how Mexico can achieve inclusive growth across all regions.

Policy Priorities for Mexico

To maximize the benefits of nearshoring in Mexico, while mitigating risks from tariffs and external shocks, experts suggest several policy priorities:

Strengthen Domestic Supply ChainsEncourage local suppliers to integrate into global value chains, reducing reliance on imports.

Diversify Industrial DevelopmentExpand beyond the North and Bajío by promoting investment in the South and Southeast, supported by infrastructure projects.

Enhance Workforce TrainingPrepare workers for high-value industries such as EV production, aerospace, and advanced electronics.

Maintain Trade CertaintyActively engage in USMCA (T-MEC) renewal negotiations to provide stability for investors.

Monitor Regional Impact of TariffsUse Banxico’s regional reports to design targeted policies that mitigate short-term shocks while preserving long-term competitiveness.

Conclusion: Mexico’s Opportunity and Challenge

The World Bank’s analysis confirms what has been evident for years: Mexico’s North and Bajío regions are the biggest beneficiaries of nearshoring. With strong industrial ecosystems and integration into U.S. supply chains, these regions are well positioned to capture the benefits of global trade realignment.

Yet the picture is not without risks. Tariffs, geopolitical uncertainty, and regional imbalances pose challenges that Mexico must address. The coming years will be decisive: success will depend on whether Mexico can not only strengthen its industrial hubs in the North and Bajío but also extend the benefits of nearshoring and supply chain integration to the rest of the country.

Handled strategically, Mexico has the chance to consolidate its position as the leading nearshoring destination in the Americas.