Mexico's Investment Appeal: Leveraging the Power of Nearshoring

As the threat of potential tariffs on Mexican imports looms over the Mexican economy, all levels of government are looking to increase the country’s attractiveness as an investment destination. In this context, infrastructure, tax incentives, and close collaboration with the private sector and the academy are essential to boost economic growth, while fostering economic complementarity along the USCMA region.

The shift in nearshoring, moving from rapid expansion to a focus on strategic optimization, has been mirrored in Mexico's investment landscape. Companies prioritize efficiency, cost reduction, and operational flexibility over simply establishing large-scale production facilities. In this scenario, all levels of government are looking to leverage their competitive advantages to become the ideal destination for investment to boost job creation.  

"What we primarily see with the new arrangement of trade relations is not only a matter of resilience in our supply chains, but the strengthening of a much more powerful and robust trade bloc in North America. Here lies the greatest opportunity,” said Ulises Fernández Gamboa, Minister of Innovation and Economic Development, State Government of Chihuahua.

Fernández emphasized identifying each state's competitive and comparative advantages to craft an investment promotion strategy that extends beyond local boundaries to include Mexico's USMCA partners. He stressed the need to avoid competition in local and regional strategies, advocating for complementarity among all parties. "Certain types of investment need to reach specific states, and competition between states can be detrimental. Therefore, we must collaborate to determine the most suitable location for these investments, for the country and the region’s economic competitiveness and benefit,” agreed Esau Garza de Vega, Minister of Economic Development, Science and Technology, State Government of Aguascalientes. 

The federal government’s Plan México considers key strategies, including substantial tax incentives and the development of specialized regional hubs, particularly targeting high-growth sectors like electric vehicles and aerospace. A core component of this strategy, published in the Official Gazette of the Federation (DOF) on Jan. 21, 2025, is a decree designed to create a competitive investment environment for domestic and foreign businesses. This includes immediate deductions on new fixed assets, ranging from 41% to 88% depending on the asset type, and the establishment of an Evaluation Committee to ensure transparency and compliance. 

Mundo Montes de Oca, Mexico Public Affairs, Advocacy & Corporate Diplomacy Director, LLYC, considers that Plan México sends a positive message to the private sector, as it shows political will and creates certainty for the business community. However, he said coordination and further incentives are necessary to achieve the government’s plans. “It will also be necessary to put in place other types of liquid stimuli through alliances with the financial sector, in order to generate very concrete types of support for these nearshoring opportunities and to take advantage of them in the best way possible,"  said Fernández.

Plan México also emphasizes the inclusion of MSMEs, dedicating at least MX$1 billion (US$49.4 million) to smaller businesses, and aims to drive long-term growth by incentivizing investments in training and innovation. Despite these efforts, joining forces with the private sector and  industry associations is perceived as a viable option to increase the potential benefits of FDI in the state. "We have developed programs with the National Autoparts Industry (INA) to map the capabilities and certifications that SMEs hold, to generate growth programs to include them in value chains. We are also conducting a mapping of products that could be manufactured in Mexico but are being imported, aiming to shift to local production. We intend to replicate this exercise across other industries,” Garza de Vega noted.

Garza de Vega and Fernández stressed the importance of close collaboration and seeking complementarity across Mexican states and the USMCA region to boost economic growth and efficiencies across value chains. They also called for programs like Plan México to be self-sustainable, to avoid them depending on a single federal administration, allowing it to become a trans-sexenal project. 

"Private sector inclusion is essential. Plans often lack continuity after government changes. Therefore, plans should not depend exclusively on federal resources; they must be sustainable and self-sufficient,” Garza de la Vega stressed.