Juan Diego Barrera SandovalTwo weeks ago, President-elect Donald Trump stated that, on his first day in office, he would seek a 10% tariff increase in Chinese goods and the imposition of 25% tariffs on products imported from Canada and Mexico.
Responses from each country seem to hint that trade wars may be on the horizon. Retailers, automotive factories, agriculture, and other industrial giants might sense blood in the water.
How can tariffs affect nearshoring services?
Fortunately, peril doesn’t seem to be on the menu for nearshore. According to JA del Rio’s Foreign Trade Partner, Antonio Ávila, Trump’s second-term actions might only reach the Nearshore industry indirectly.
“There shouldn’t be any direct effects on active investments. They could be expected on companies seeking to enter the region. Those who incur in normal entry risks and need to invest in products that will help set up shop.”
Protectionist policies could actually favor ongoing investments. An appreciation of USD and depreciation of currencies like the Mexican Peso could make nearshoring more profitable.
In the same spirit, Marc Chandler, Bannockburn Global Forex currency expert, highlighted recent currency trends:
“Since the US election, nearly all emerging market currencies have weakened. Brazil’s real has dropped 4.8%, making it the weakest currency last month. The Mexican peso has fallen by less than 0.5%, putting it in the top 5 performers. However, Peru and Colombia haven’t reduced their value. This signals how domestic policy and fiscal credibility are still very important, and tariffs are more of a backdrop for now.”
Ávila talked us through short and long term effects of potential trade wars around the US. “The first effect we might see is new investments could hesitate due to uncertainty. Intangible services shouldn’t worry unless Trump’s administration decides to push specific tariffs on companies with workforces based abroad.”
He cited automotive production’s re-shoring process as an example of the fact such decisions shouldn’t be dismissed as a future possibility.
However, it seems to be a distant scenario. Ávila also explained how announced tariffs align with product importation. After all, Trump’s focused on revitalizing industrial labor and production inside the country as a motor for employment.
Ávila worked our memory: “Last time around, Trump also pushed similar tariffs right from the start. But they were quickly renegotiated afterward”.
Nonetheless, he called to our attention that, in the long run, tariffs might have an effect on US inflation that could weaken US dollar. And it could turn true if Sheinbaum makes her hint of retaliatory tariffs a reality. That scenario, reverse from what is at hand , could deal a blow to nearshoring companies’ finances. That’s why we can’t ignore the bigger picture.
China vs. US and the regional shift into multipolarity
Marc Chandler, Bannockburn Global Forex currency expert, provided necessary context:
“During the last 45 years, North American economy was organized on a continental basis. Alongside Canada and Mexico, Colombia and several Central-American countries have free trade agreements with US.”
Other superpowers are now gaining terrain. After years of negotiations, European Union and Mercosur recently sealed a juicy trade deal. It is worth noting that ratification is pending, but big steps are being taken in that direction. On the other hand, one can’t forget Brazil is a crucial part of BRICS.
The US could be making itself a less favorable destination for exports through tariffs. And it sounds like the cherry-on-top for a regional revaluation of commercial partnerships.
“Trump is poised to abandon the neoliberal foreign direct investment strategy pursued by US’ multinational companies. An alternative to it, or at least diversification, is obviously going to be evaluated by Latin American economies,” Chandler explained.
Trump’s tariff announcement is timed with that in mind. Both Ávila and Chandler wonder if the announced 2026 renegotiation of USMCA commercial treaty didn’t already start with security as an excuse.
“I think this is all cosmetics. If I was in the Global South now, I’d be worried about re-shoring policies. Trump’s enemies are not Mexican or Canadian companies, but US companies working abroad and selling back to the US,” commented Chandler.
He also believes Latin American economies and governments will be more directly contested in a geopolitical sense. According to him, diplomacy can become a game of balancing between security ties to the US and proposals of economic integration to other superpowers, particularly China.
“Having access to two large countries that want to win favor allows developing countries to pit them off against each other to strike a better deal. Think about Australia: their largest trading partner by far is China; yet they’re clearly and deeply embedded in the US global security various and culturally.”
However, there’s a long way to go regarding that scenario.
The imposition of tariffs in 2025 could deal a serious blow to the region’s economy and ricochet in American pocketbooks, specially in the case of Mexico. For now, it seems Trump’s threats are largely a test as part of a larger bargaining gambit.
But commercial integration and the bigger picture of nearshoring services is bound to keep itself dry in the middle of the storm.
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