As the trade landscape shifts due to tariffs and global supply chain challenges, Mexican manufacturers are adapting by sourcing locally and reevaluating their import strategies.
Tariffs Drive Change in Mexican Manufacturing Amidst U.S.-China Tensions
Tariffs Drive Change in Mexican Manufacturing Amidst U.S.-China Tensions
Factories in Mexico pivot to local suppliers and adapt strategies as tariffs impact trade
Caught between the pressures of U.S. tariffs and shifting relations with China, manufacturers in Mexico are facing significant challenges. With up to 80 percent of their products destined for the U.S., companies are urgently pivoting their supply chains to maintain competitiveness.
In Apodaca, a city in northern Mexico, the refrigeration and air-conditioning factory for Danish company Danfoss exemplifies this trend. The factory, located just a few hours away from the U.S. border, was designed primarily to cater to the American market. However, the tariffs implemented during President Trump's administration posed a serious risk that could disrupt its operations.
Prior to the tariffs, only around 40 percent of the factory's products adhered to the trade agreement established during Trump's first term. The suspension of tariffs on Mexican goods meeting those regulations provided an opportunity for management to strategize a new approach. They began to search for suppliers within Mexico for key components intended for export to the U.S., closely examining which products were eligible for inclusion under the agreement but had not yet achieved certification.
Xavier Casas, the factory’s overseer, likened navigating these changes to enduring turbulence while flying, emphasizing the need to adapt amid uncertainty. “When you’re on a plane and there’s turbulence, you get really scared and you hold onto your seat,” he noted, but reassured, "99 percent of the time, the plane is going to land."
As the Mexican economy increasingly leans on locally sourced materials and redesigned manufacturing processes, factories like Danfoss' reflect a broader adaptation strategy that not only safeguards jobs but also aims to strengthen the nation's position in the international marketplace.
In Apodaca, a city in northern Mexico, the refrigeration and air-conditioning factory for Danish company Danfoss exemplifies this trend. The factory, located just a few hours away from the U.S. border, was designed primarily to cater to the American market. However, the tariffs implemented during President Trump's administration posed a serious risk that could disrupt its operations.
Prior to the tariffs, only around 40 percent of the factory's products adhered to the trade agreement established during Trump's first term. The suspension of tariffs on Mexican goods meeting those regulations provided an opportunity for management to strategize a new approach. They began to search for suppliers within Mexico for key components intended for export to the U.S., closely examining which products were eligible for inclusion under the agreement but had not yet achieved certification.
Xavier Casas, the factory’s overseer, likened navigating these changes to enduring turbulence while flying, emphasizing the need to adapt amid uncertainty. “When you’re on a plane and there’s turbulence, you get really scared and you hold onto your seat,” he noted, but reassured, "99 percent of the time, the plane is going to land."
As the Mexican economy increasingly leans on locally sourced materials and redesigned manufacturing processes, factories like Danfoss' reflect a broader adaptation strategy that not only safeguards jobs but also aims to strengthen the nation's position in the international marketplace.
