Mexico Introduces Tax Incentives for Nearshoring

On January 13, 2025, Mexico's President Claudia Sheinbaum announced a comprehensive nearshoring initiative aimed at reducing reliance on Chinese imports while enhancing local production. The plan includes significant tax incentives for foreign manufacturers across ten sectors such as semiconductors and pharmaceuticals, with benefits like accelerated depreciation on assets and deductions for worker training expenses. This initiative is expected to boost Mexico's GDP by 1.2% and strengthen trade relations with the U.S., countering calls from former President Donald Trump for tariffs on Mexican goods. Sheinbaum emphasized the importance of local production in light of economic uncertainties and the need for Mexico to leverage its trade agreements with the U.S. and Canada. Despite the potential benefits, experts caution that issues related to infrastructure and skilled labor remain challenges that Mexico must address to become a leading nearshoring destination. The overarching goal is to create a more resilient North American supply chain amid global economic shifts.