Manufacturing in Mexico Remains Steady Amid Tariff Shakeups Thanks to the USMCA

The more things change, the more things stay the same – at least when it comes to trade. Though manufacturers are no strangers to navigating the ups and downs of the market, there have already been unrelenting tariff applications (and retractions) in the first six months of 2025.

Yet, the one thing that has remained in place since its onset in 2018 is the trade war between the U.S. and China. This conflict first began during President Trump’s first term in office, and the volatility between the two countries has continued ever since, causing manufacturers to move away from China as a long-term strategy.

This is a significant shift following decades of American companies depending on Chinese manufacturing for its low-cost labor and steady supply chains. However, due to rising tariffs and the derailment of the supply chain infrastructure during the pandemic, manufacturers have begun to lean more heavily on nearshoring to Mexico.

In addition to the need to diversify their portfolios, the official enactment of the U.S.-Mexico-Canada Agreement (USMCA) in 2020 solidified manufacturing in Mexico as the go-to, long-term strategic move.

As a replacement to the pre-existing North American Free Trade Agreement (NAFTA), the tariff-friendly USMCA benefits those within the North American trade bloc and has resulted in a steady increase in U.S. manufacturers moving their operations away from China or at least expanding their presence by also launching production closer to home.

Benefits of the USMCA Compared to Trade with China

The focus on tariffs has kept manufacturers on their toes as the Trump administration goes back and forth with implementation, though there has been some solace found through the USMCA.

The USMCA eliminates tariffs on qualifying goods for manufacturers in the U.S., Mexico, and Canada. Whereas, there have been additional restrictions on certain components, including semiconductors and automotive parts from China, under President Trump. Add in the ongoing geopolitical tensions and skepticism around technology protection, and many manufacturers are moving away from China as their main hub of manufacturing.

Furthermore, the cheap labor rate China was once known for is steadily increasing and failing to offset Asia’s lengthy and costly shipping timeline, which can take weeks to reach the U.S., compared to a few days, if not same-day, when shipping from Mexico. Thanks to the tariff relief, streamlined customs processes, and enhanced intellectual property protection under the USMCA, manufacturing in Mexico has become a more cost-effective and reliable way to do business for many.

And by working with a shelter services company, U.S. and other foreign manufacturers have expertise on their side to stay current on trade compliance, along with the infrastructure to streamline production setup and save on manufacturing costs.

Shelter Services for Manufacturers Moving Operations to Mexico

As part of a comprehensive solution, an experienced shelter services company like IVEMSA can help U.S. manufacturers navigate changes concerning trade and confirm whether their goods qualify under the USMCA.

They can also provide guidance on how to make the type of transformation necessary to meet the rules of origin to avoid the implementation of tariffs. Even in uncertain times, a shelter company can help manufacturers feel confident about their next move.

Questions about tariffs when manufacturing in Mexico? Contact IVEMSA and speak with one of our team members today.