The Trump Strategy: A Call for Reindustrialization and Its Implications for Mexico
“Manufacture in the United States or prepare to face tariffs.” With this warning, former President Donald Trump is achieving what many considered a challenge: getting companies to reevaluate their investment decisions and lean toward reindustrialization in their home country. Meanwhile, the momentum of nearshoring in Mexico is beginning to decline. The U.S. president announced the implementation of a 25% tariff on Mexico and Canada, moving from mere threat to firm action. According to Trump, this move aims to incentivize the return of industries to U.S. soil, but it’s also tied to the issue of fentanyl trafficking.
This year, Trump has garnered the attention of various companies and investors, committing a total investment of $1.6 trillion through firms like Apple, Stargate, TSMC, Eli Lilly, and Nippon Steel. This wave of capital also includes Emirati billionaire Hussain Sajwani and the Crown Prince of Saudi Arabia, who announced a $600 billion injection into the United States. Trump’s tariff policy is tipping the scales, as the president stated that Apple decided to allocate $500 billion to manufacturing in the U.S. instead of in Mexico, where it planned to open two factories. On her part, President Claudia Sheinbaum insists that investment continues to flow into Mexico, although the amounts announced for 2025 barely reach $13.75 billion, much of which are confirmations of existing commitments, like Amazon’s $5 billion investment.
When a country imposes tariffs, multinational companies tend to open or expand operations in that country to avoid those taxes, which can stimulate investment, according to an analysis by Henry Loewendahl, a consultant for fDi Intelligence, a service of The Financial Times. For Trump, his tariff strategy also aims to attract more foreign direct investment (FDI) to the United States. Loewendahl predicts that FDI to the United States will increase by 20% over the next two years. Sheinbaum, on her end, hopes to recover industries and continue attracting foreign investments through the Mexico Plan, although this has been described as a good intention that still needs concrete definition. However, the tariffs imposed by Trump are complicating investments in Mexico; the business sector has identified up to $60 billion in projects that are stalled. The law firm Covington & Burling LLP notes that the Mexico Plan arrives at a difficult time for Sheinbaum’s administration and for the country’s economy. Amid signs of economic slowdown, the Plan aims to create certainty in an investment context marked by recent economic and political reforms, such as changes in the judicial system and the elimination of independent regulatory agencies, which concerns investors.
Furthermore, the arrival of a new Trump administration looking to reform U.S. trade policy, prioritizing American workers, and attempting to balance trade relations complicates the situation even further. Both Mexico and the United States are seeking to strengthen their domestic production not only to export but also to supply their own markets. Recently, Sheinbaum emphasized the need to recover key industries that have been fundamental to the Mexican economy. "We want to boost industrialization in Mexico, specifically in sectors we used to have and have lost. For example, the textile industry, which was crucial for the country, is something we are now looking to recover," the president stated. Referring to the agricultural sector, Sheinbaum acknowledged that Mexico has a solid export industry but stressed the importance of promoting production for domestic consumption. She also mentioned other strategic sectors the government aims to revitalize, such as the furniture industry and semiconductor manufacturing, a constantly growing area. A particular case was the pharmaceutical industry, which suffered a significant decline due to decisions made in past administrations. "Previously, to sell medications to the government, it was required to have a plant in Mexico. That policy was eliminated during Calderón's term, and the industry fell into decline. We want to change that and recover national pharmaceutical production," she concluded.
It is clear that the dynamics between U.S. tariff policies and Mexico's economic strategies will significantly affect the investment climate in both countries. As companies seek to adapt to a changing environment, the key will be how both governments manage to balance their interests and foster sustainable development for the economy. Diversification and adaptation will be essential to minimize adverse effects and take advantage of the opportunities that may arise from this competitive landscape.
