While the United States and China announced a symbolic pause in their ongoing trade war, the agreement falls short of a structural reset. For Mexico, this presents both a renewed opportunity and a looming challenge. As global supply chains realign, Mexico’s nearshoring strategy remains strong—but its long-term advantage depends on internal reforms.

A Temporary Truce: U.S.–China Trade War Takes a Breath

On June 11, 2025, the U.S. and China unveiled what has been described as an initial framework rather than a full trade deal. While the U.S. agreed to restore visas for Chinese students and China resumed exports of rare earth elements, the average 55% tariffs on Chinese goods remain largely in place.

This is not a full reopening of trade but a strategic pause—one that reinforces Mexico’s relevance as an alternative manufacturing hub.

Nearshoring to Mexico: The Real Winner of the Trade War

Mexico has emerged as a preferred nearshoring destination for companies looking to avoid high U.S. tariffs on Chinese imports. Since 2018, when President Donald Trump imposed steep tariffs—some as high as 145%—on Chinese goods, Mexico has benefited significantly:

• U.S. imports from Mexico rose 38%
• U.S. imports from China dropped by 35%
• In 2024 alone, foreign direct investment in Mexico topped $35 billion, primarily linked to supply chain relocation

This trade shift has turned Mexico into the second-largest electronics exporter to the U.S., driven by investments in semiconductors, automotive parts, and appliances.

Mexico’s Long-Term Advantage Is Not Guaranteed

Despite the impressive gains, Mexico’s manufacturing competitiveness is not immune to challenges. Some production expansions have stalled due to global uncertainty and continued competition from Asian manufacturers in sectors like textiles.

Mexico must address:

• Bottlenecks in infrastructure (especially rail, ports, and energy)
• Legal certainty and rule of law
• Workforce development and technical education
• Public safety and crime reduction

If these barriers remain unresolved, Mexico risks losing ground—even with favorable trade dynamics.

Strategic Projects Like the Isthmus Corridor Matter

Projects such as the Interoceanic Corridor of the Isthmus of Tehuantepec could be game changers. If developed properly, this logistics platform could turn southern Mexico into a gateway for Asian investment targeting North America.

Combined with the USMCA's preferential trade rules, Mexico’s geographical proximity and stable political relationship with the U.S. further strengthen its nearshoring edge.

China Is Not Out—But It’s Not Fully In, Either

The partial trade thaw may give China a slight boost in exports, especially in components tied to electric vehicles and defense, but it does not signal a return to pre-trade-war openness. The structural incentives to shift supply chains to Mexico remain intact, including:

• Reduced risk exposure
• Stable access to the U.S. market
• Improved investment environment in key industrial regions

Conclusion: Mexico Must Act Now to Sustain Its Edge

The current pause between the U.S. and China is not a peace deal; it is a temporary truce. If Mexico wants to remain the leading nearshoring destination in North America, it must act decisively to improve its infrastructure, legal certainty, and workforce readiness.

Otherwise, the country could lose momentum in a global race where nearshoring to Mexico, foreign direct investment in Mexico, and Mexico’s manufacturing future are on the line.