Manufacturing’s Forced Shift Toward Nearshoring in North America

Global manufacturing is realigning. Reliance on distant Asian supply chains is giving way to production closer to home, in Mexico and the U.S. Midwest, driven by geopolitical friction, rising overseas costs and the need for supply-chain resilience. As companies shorten lead times and leverage USMCA benefits, nearshoring is becoming a necessity.

Why Now? Key Drivers of the Nearshoring Movement

Geopolitical Uncertainty and Trade Tensions
The U.S.-China rivalry has deepened, creating an environment where tariffs and export controls can change overnight. During the pandemic, lockdowns in key manufacturing hubs in Asia disrupted supply of essential components, from semiconductors to medical supplies. More recently, the threat of widened trade disputes has prompted firms to question the wisdom of overreliance on a single region. In early 2025, the U.S. imposed tariffs of up to 25 percent on select imports from Canada and Mexico, illustrating how political shifts can instantly affect supply-chain costs.

Cost, Proximity and Speed
Freight cost per container from Asia to North America has risen by nearly 60 percent since 2020, driven by port congestion and shipping-line rate hikes. In contrast, overland trucking from Mexico to U.S. border hubs remains stable at a fraction of that expense. Suppliers located within 500 miles of major U.S. assembly plants can now replenish parts in under 72 hours, compared with the six-week lead time of ocean freight, supporting just-in-time manufacturing models with fewer stockouts.

USMCA Incentives
The US-Mexico-Canada Agreement reinforced rules of origin requiring 75 percent regional content for autos and unlocked tariff-free access across North America. Analysts at Product Distribution Strategy nearshoring statistics forecast that USMCA-driven sectors could generate 40 billion dollars in export growth by 2030.

Mexico: The Epicenter of Nearshoring

Massive Investment and FDI Growth
Foreign direct investment into Mexico’s manufacturing sector has surged, with capital inflows from the U.S., Japan and the Europ

ean Union. Automotive OEMs have poured resources into new assembly plants, while electronics giants are expanding semiconductor-packaging facilities. In 2024 alone, FDI related to nearshoring topped 15 billion dollars.

Dominant and Emerging Sectors
While automotive and consumer electronics remain the backbone of Mexico’s export economy, growth is accelerating in aerospace components, medical equipment and renewable-energy hardware. Guadalajara has emerged as a hub for printed-circuit-board manufacturing, and Querétaro hosts major aerospace assembly lines. HVAC-component makers are also expanding to meet North American demand.

Logistics Infrastructure Scaling
New rail links like the Canadian Pacific Kansas City line and massive facility investments by logistics leaders are smoothing cross-border flows, as detailed in the Wall Street Journal report on U.S. border cities. Mexico is also upgrading highways, inland ports and digital-customs clearance systems. The Lázaro Cárdenas terminal expansion aims to double capacity by 2028, reducing dwell times.

Challenges and Policy Risks
Mexico’s dependence on U.S. demand includes over 80 percent of its exports and leaves it vulnerable to downturns south of the border. Judicial reforms intended to combat corruption have raised concerns over contract enforcement. Security issues in certain regions add to the due-diligence burden.

U.S. Midwest: The Reshoring Companion

Legacy Infrastructure Revamped
States such as Michigan, Indiana and Ohio leveraged underused plants and skilled workforces to attract reopening of automotive and machinery lines. Manufacturing clusters that declined in past decades have rebounded with capital infusion and state grants for equipment modernization.

Advanced Manufacturing and Clean Energy
Federal funding through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act is spurring battery gigafactories and solar-panel assembly plants across the Midwest. These projects create demand for precision-machining services and component suppliers, revitalizing regional supply-chain ecosystems.

Talent and Training
Midwest community colleges and technical institutes partner with OEMs on curriculum for robotics, additive manufacturing and digital-twin technologies. Apprenticeship programs offer earn-while-you-learn pathways, addressing skills gaps and boosting local employment.

Economic and Strategic Payoffs

Resilience and Risk Management
An agile network of nearshore and domestic sites enables dual-sourcing strategies. If one facility faces disruption due to weather, equipment failure or policy changes, production can shift seamlessly to another location with minimal downtime. To support these shifts, many manufacturers deploy mobile data-collection and real-time visibility tools. RFgen’s inventory management platform automates transactions at the point of activity, giving you an up-to-the-minute view of stock levels across nearshore sites.

Cost Optimization Over Time
Rising Mexican wages still compare favorably to U.S. labor when you factor in lower freight costs, reduced delays and tariff avoidance. Advances in automation further narrow the labor-cost gap. 

Sustainability and ESG Pressure
Shifting production within North America cuts transport-related emissions by as much as 80 percent compared to trans-Pacific shipments, according to NovaLink sustainability insights. Shorter routes also support circular-economy goals by enabling easier recycling loops and remanufacturing.

Job Creation with Automation
Automation shifts roles toward technical and analytical functions. Border towns like Laredo, Texas, which handled 320 billion dollars in trade in 2023, are seeing job growth in robotics maintenance, data analytics and smart logistics.

Future Outlook: Continuation or Complication

Mexico’s manufacturing exports are projected to grow from 455 billion dollars in 2023 to 609

 billion dollars by 2028. The Brookings Institution analysis of USMCA and nearshoring highlights aligned regulations and trade facilitation measures as key drivers. Some manufacturers are adding sites in Central America or Southeast Asia for noncritical components. Mexico itself is tightening local-content rules to retain more value onshore, as reported by AP News on local-content policy. 

Policy uncertainty remains the greatest wildcard. To protect your operations and keep momentum, consider these steps:

• Build flexibility into your network
  • Map multiple nearshore and domestic sites for key components so you can switch production at short notice
  • Negotiate optional capacity slots with contract manufacturers and logistics partners to lock in throughput if new tariffs bite

• Engage in proactive advocacy
  • Join industry associations and regional trade councils to stay ahead of proposed tariff or local‑content rule changes
  • Supply data on your nearshoring successes to policymakers to shape balanced reform

Infrastructure bottlenecks at ports and inland hubs can stall progress. You can counter them by:

• Securing inland‑port capacity
  • Reserve container‑drop and drayage slots well before peak seasons
  • Partner with emerging inland terminals to avoid coastal congestion

• Deploying real‑time visibility tools
  • Use digital‑customs clearance and GPS‑tracked shipments to spot delays the moment they occur
  • Set automated alerts for dwell‑time spikes so you can reroute freight before backup builds

Environmental and community considerations will shape long‑term growth. To earn and keep your license to operate:

• Embed sustainability in site selection
  • Choose locations with established recycling and remanufacturing infrastructure to close the loop on materials
  • Target facilities that run on renewables or have clear transition plans toward lower‑carbon power

• Collaborate with local stakeholders
  • Hold roundtables with community leaders to surface concerns early and build goodwill
  • Publish transparent ESG targets and progress updates to turn regulators and residents into allies

By layering these tactics into your nearshoring strategy, you’ll move beyond reacting to market shifts and start steering them. That’s how you turn a potential complication into a competitive advantage.

Case Studies and Real-World Examples

Automotive Rebirth
A major German automaker ramped up EV production in Aguascalientes, integrating regional battery-cell suppliers to meet USMCA rules. Its Detroit partner reopened a stamping plant for advanced materials.

GE Appliances in Kentucky
After shifting some refrigeration assembly back from Mexico, the Louisville plant upgraded its robotics and hired over 200 local technicians to operate new automation lines, reducing lead times on core refrigerator modules by 40%. The facility now sources compressors and electronic controls from suppliers in Indiana and Ohio, trimming inbound freight costs by one‑third. Kentucky’s state incentives and federal Manufacturing Extension Partnership support funded equipment upgrades that doubled output capacity while meeting USMCA content thresholds. By leveraging real‑time production monitoring, the plant can reroute parts between nearby sites within hours, bolstering just‑in‑time fulfillment. And with energy‑efficiency retrofits powered by Inflation Reduction Act grants, the site has cut its carbon footprint by nearly 25 percent.

Foxconn’s Wisconsin Campus
The electronics giant committed to a multi-billion-dollar display-technology campus, signaling high-tech manufacturing’s return to the Midwest.

Supply-Chain Shake-Ups
In response to February 2025 tariffs, some firms stockpiled parts while others absorbed penalties rather than revert to Asia. This demonstrates that regional production has reached critical mass, as described in the Washington Post tariff impact story.

Is nearshoring a hurdle too big?

Policy uncertainty remains the greatest wildcard. Companies need flexible networks that can adapt to new tariffs or regulatory changes. Building local supplier bases and workforce capabilities is an ongoing endeavor requiring collaboration among industry, government and educational institutions. Infrastructure bottlenecks at ports and inland hubs must be addressed through public investment and private-sector innovation. Finally, environmental and community considerations must guide expansion to ensure enduring social license to operate.

Nearshoring refines globalization, prioritizing speed, security and sustainability within a regional framework. Manufacturers that combine digital tools like RFgen’s mobile inventory management and barcoding solutions with strategic site selection and skilled talent will thrive in this evolving landscape.