A factory in northern Mexico, primarily established to manufacture air-conditioners and refrigeration units for the U.S. market, has adapted its operations in response to President Trump's tariffs. Approximately 80 percent of the products from the factory are exported to the United States, making it crucial for the company to devise a new strategy amidst increasing tariffs.
Prior to the implementation of tariffs in March, only 40 percent of the factory's exports complied with trade regulations set forth in the U.S.-Mexico-Canada Agreement (U.S.M.C.A.). Following the suspension of tariffs on goods adhering to the agreement, the factory shifted focus. Company leaders identified Mexican suppliers and evaluated products that could meet compliance but were not yet certified, while also reconsidering plans to import from outside North America.
Xavier Casas, who oversees the factory for Danfoss in Apodaca, Mexico, noted that the current situation prompts companies to explore local manufacturing options rather than relying on imports from Asia. As of now, nearly all Danfoss products exported to the U.S. comply with U.S.M.C.A. regulations. Efforts are being made to produce some components domestically in Mexico instead of sourcing them from China to mitigate the impact of U.S. tariffs.
While the U.S. and China have taken steps to reduce trade tensions, experts remain uncertain about the durability of these agreements. Analysts suggest that U.S. tariffs are unlikely to revert to higher levels as long as the current administration remains in power.
Many companies in Latin America, especially in Mexico, have faced challenges balancing the cost-effective supply chains from Asia with the lucrative U.S. market. Despite the difficulties associated with moving away from Chinese suppliers, some Mexican firms view the tariffs as an opportunity to strengthen local manufacturing and lessen dependence on foreign suppliers.
According to officials from the Mexican Economy Ministry, a rising number of exporters are eager to demonstrate that their products are primarily manufactured with regional materials. Recent data indicates that around 87 percent of Mexican exports are currently not subjected to U.S. tariffs, representing only a slight decline from the previous year.
Customs brokers report that many businesses are actively reconfiguring their supply chains. For instance, a manufacturing director in Monterrey mentioned a shift away from sourcing key components from Chinese companies to mitigate potential risks associated with tariffs targeting Chinese suppliers.
In light of the evolving trade landscape, Mexico's President Claudia Sheinbaum has promoted an initiative known as Plan Mexico, aimed at revitalizing local manufacturing and reducing reliance on imports, particularly from nations without trade agreements.
Sheinbaum emphasized the importance of strengthening the U.S.M.C.A. to enhance competitiveness against Asian economies, especially China. It has been suggested that if North America could produce a portion of what it imports from China, substantial economic growth could be realized across the region.
The state of Nuevo León has been proactive in taking advantage of the situation, with efforts to attract foreign investment while encouraging local supply sourcing. Local leaders in sectors such as automotive manufacturing are optimistic about the potential to develop local capacities for materials traditionally sourced from Asia.
Overall, the strategic focus has shifted towards enhancing North American manufacturing to adapt to ongoing trade challenges and foster regional economic growth.