As 'reciprocal' tariffs shock the economy, nearshoring expert eyes opportunity in Mexico

Trump’s proclaimed “Liberation Day” and subsequent reciprocal tariffs on US trading partners are sending stocks tumbling and uproar around the world. 

Javier "Mr. Nearshoring®" Zarazua, a recognized expert in the nearshoring industry and Business Partner with Tompkins Ventures, offers timely insights into how President Trump’s new tariffs will impact global manufacturing, especially with regard to Mexico and how their position within the North American supply chain will be impacted. 

Economic targets: Zarazua is clear about the direction of U.S. trade policy. "It’s very obvious where Trump wants to go, and for Mexico, it’s great news," he says. "China has become the economic target, and that’s where most of the changes are happening." Under the current administration, tariffs on China have risen dramatically, with the U.S. imposing 54% more tariffs on Chinese goods compared to January 1st. In contrast, Vietnam faces a 46% increase. However, Mexico stands out as a notable exception, with the country being exempted from the newest tariffs, positioning it as a leading choice as a new manufacturing location.

Geographic advantage: "Mexico is uniquely positioned to benefit from this," Zarazua notes. "We’re right next to the U.S., which gives us a huge advantage when it comes to tariffs on steel and aluminum. No other country in the world is in a position to do what Mexico can do." Zarazua points to a recent project he quoted, where bringing steel from the U.S. would incur a 12% cost but still offers savings by avoiding other tariffs that could be as high as 25%.

A question of readiness: As the tariffs on China continue to rise, Zarazua expects more manufacturing projects to shift to Mexico. "If no other changes are made besides the tariffs already announced, a huge volume of projects is going to come to Mexico," he predicts. But there are challenges ahead. "Mexico doesn’t have enough manufacturing capacity to meet the increased demand," he warns. "The big question for us is how quickly we can develop our supply chains to be more vertically integrated and handle the increased volume."

No retaliation: Despite the looming uncertainty, Zarazua is optimistic about Mexico’s pragmatic approach to the situation. "I don’t think Mexico will retaliate with tariffs," he says. "Our president has been very pragmatic, unlike other countries who have taken a more combative stance. Sheinbaum is focused on keeping the relationship with the U.S. positive and productive."

Exciting and scary: Zarazua believes that tariff changes could fundamentally reshape global manufacturing. "Trump is going to transform the industrial world. He’s already reshaped it once, and I’m certain he’s not afraid to do it again on a larger scale," Zarazua remarks. "It’s exciting, but it’s also a bit scary at the same time."