The recent U.S.–China trade agreement, announced on June 11, 2025, may seem like a diplomatic breakthrough—but in reality, it is more pause than pact. With no structural changes and most tariffs still in place, the deal does little to resolve the underlying rivalry. For Mexico, the implications are both promising and challenging.

Over the past few years, Mexico has been a key beneficiary of the U.S.–China trade war, becoming a preferred destination for companies looking to relocate production closer to the U.S. As firms sought to avoid tariffs of up to 145% on Chinese goods, nearshoring in Mexico surged. In 2024 alone, Mexico attracted over $35 billion USD in foreign direct investment linked to this shift.

Mexico's Export Power Grows Amid Trade Tensions

Thanks to its geographic proximity, competitive labor, and the USMCA (T-MEC) trade agreement, Mexico’s nearshoring strategy has paid off. U.S. imports from Mexico rose by 38%, while imports from China dropped by 35%. Mexico is now the second-largest electronics exporter to the U.S., driven by growth in sectors like components, home appliances, and auto parts.

Despite this success, the advantages are not guaranteed. Global uncertainty has slowed some projects, and Mexican infrastructure bottlenecks remain a hurdle. Without long-term improvements in security, legal certainty, and logistics, the momentum could stall.

The New U.S.–China Deal: A Tenuous Truce

The new U.S.–China deal includes limited concessions: China will resume exports of rare earths and magnetic components, while the U.S. will allow the return of Chinese students to its universities. However, average tariffs on Chinese goods remain around 55%—signaling a temporary pause rather than a permanent resolution.

This means Mexico’s nearshoring advantage remains intact—and may even expand.

While a short-term rise in Chinese exports may occur over the summer, the structural incentives that favor manufacturing in Mexico—such as lower political risk, supply chain resilience, and tariff exemptions—remain strong.

Mexico’s Next Move: Unlocking Full Potential

To sustain its edge, Mexico must address domestic challenges. Experts argue that the country’s future as a regional manufacturing hub depends on improving infrastructure, skilled labor availability, and regulatory transparency. If successful, initiatives like the Interoceanic Corridor of the Isthmus of Tehuantepec could turn southern Mexico into a new logistics platform—even attracting Asian investment meant to serve North America.

Conclusion

The recent U.S.–China trade pause offers clarity: Mexico's nearshoring boom is far from over. But taking full advantage requires solving long-standing internal issues. The next phase of global supply chain realignment will reward countries that combine opportunity with execution—and Mexico still has the upper hand, for now.