Scores of multinational Chinese corporations, in an attempt to minimize shipping costs and tariffs on their goods, have begun to ‘nearshore’ their production to Mexico. Nearshoring is the practice of sending factories and production sites to an external country where labor costs and tariffs are low. While this phenomenon has existed for over a decade, it has proliferated dramatically following the trade wars between the United States and China under the Trump Administration. Nearshoring has been recently under the microscope due to Anthony Blinken’s April visit to China where he was expected to discuss Chinese fentanyl production, Taiwan, Russia, and the Uighurs. Blinken’s visit happens amidst rumors that the United States is considering removing certain Chinese banks from the SWIFT payment system, a move that would further incentivize Chinese nearshoring to Mexico.

Leading Mexican presidential candidates Xóchitl Gálvez and Claudia Sheinbaum are championing nearshoring as a historic opportunity for the Mexican economy. In response to high demand for industrial park space in Mexico, front-runner Sheinbaum told Spanish newspaper Vanguardia she plans to “build 100 industrial parks in the country linked to this vision of development with wellbeing and sustainability.” Gálvez is equally adamant about the opportunity nearshoring presents to the Mexican economy, telling a bank convention in Acapulco “[w]ake up, let’s not let go [of] the best opportunity we’ve had in a generation to boost our economy.” 

Considering that one of China’s largest motivations for nearshoring facilities to Mexico is the relatively cheap labor, one can assume that labor will be heavily exploited in these facilities. Although the arrival of new job opportunities will certainly benefit the Mexican economy in the long term, the country will have to withstand a long period of harsh factory production much like China did to achieve its first world status. Hopefully the initiative to court international capital to Mexico will in turn motivate politicians to rein in criminal organizations like the cartel, reducing the threat to everyday Mexicans that experience kidnapping and extortion. Overall, it is extremely important for Mexico, at this stage in its economic development, to prioritize the health and safety of the workers who will ultimately transform Mexico into a highly industrialized country.

Due to the trade wars between China and the United States under the Trump administration, nearshoring has entered regular political discourse. What Americans may not know is that companies from countries other than China, including German carmakers, have also nearshored facilities to take advantage of duty free trade with the U.S. under U.S.M.C.A., the successor to N.A.F.T.A. Mexico’s former vice minister for external trade told the BBC that under U.S.M.C.A., products created in nearshored facilities are “to all intents and purposes, Mexican.” This loophole allows international corporations to export their products to the U.S. without tariffs. Having replaced China as America’s number one trading partner, Mexico is poised to become a strong player in the international political economy, benefiting from its geographical proximity to the United States and the eagerness of international corporations to invest.

While tensions between the United States and China are heating up, Mexico stands to gain from their hostility. The U.S. threat of removing some Chinese banks from the SWIFT payment system is a further incentive for Chinese firms to set up camp in Mexico. With upcoming presidential elections in Mexico, the election of a nearshoring friendly candidate is inevitable. What is yet to be seen, is whether nearshoring will be accommodated in a responsible fashion. A responsible implementation of a nearshoring friendly policy would ultimately crack down on cartel kidnappings and extortion, insist on reasonable working conditions and assert the rights of Mexicans to accrue the benefits of globalization in the form of dignified living.