Trump tariffs reverberate through Mexico's industrial belt

For decades, Mexico’s industrial border regions flourished thanks to trade with the neighboring U.S. However, newly imposed tariffs are now threatening thousands of factories and jobs.

Mexico has long attracted companies due to lower labor costs, tax incentives, and the North American free trade pact. But former U.S. President Donald Trump’s 25% tariffs on Mexican goods have cast uncertainty over the trade deal, which was renegotiated during his first term.

These tariffs will impact manufacturers across industries, from medical supplies to semiconductors, said Jose Luis Contreras, head of the Mesa de Otay Industrial Association in Tijuana. Many products, like auto parts, cross the border multiple times during production, making the tariffs especially disruptive.

Tijuana, home to around 400 factories, sees about a million cargo crossings per year. Contreras suggested that Mexico should rethink its trade strategy, potentially strengthening domestic production under the USMCA agreement and exploring new markets while offering tax incentives. He emphasized the urgency, as 80,000 factory jobs near Tijuana alone are at risk.

The tariffs have also slowed Mexico’s efforts to attract U.S. companies relocating from Asia, a process known as "nearshoring." In response, President Claudia Sheinbaum has warned that Mexico may look for other trading partners if necessary and has vowed to impose retaliatory tariffs. Sheinbaum has also advocated for replacing Chinese imports with locally made goods to address U.S. concerns about China using Mexico as a gateway into the American market.

U.S. Treasury Secretary Scott Bessent revealed that Mexico had even suggested mirroring Washington’s tariffs on China. Meanwhile, Mexican business leaders in Nuevo Leon blamed China for the trade tensions, arguing that North America should strengthen regional cooperation instead of imposing trade barriers.

With over 80% of Mexico’s exports going to the U.S., analysts warn the tariffs could push the country into recession. Sheinbaum accused Trump of violating the USMCA, noting that Mexico’s role in U.S. trade growth was a result of longstanding cooperation. Contreras, however, believes Mexico’s skilled workforce will remain a key advantage, even if competitiveness takes a hit.