Mexico Nearshoring: USMCA, Tariffs and China Inputs

By ChinaManufacturers.com Editorial Desk · Updated 30 October 2026 · How this page was researched

Is Mexico now a bigger US supplier than China?

Yes. Mexico has been the largest source of US goods imports since 2023, and in 2025 the US imported US$534.3 billion from Mexico against US$308.7 billion from China (US Census Bureau). Nearshoring — moving production to a country close to the end market, which for US buyers usually means Mexico — is the strategy behind much of that shift. The figures below are Census basis, nominal and not seasonally adjusted; the shares are the Editorial Desk's calculation from the Census world total.

Period	US imports from Mexico	Share	US imports from China	Share
2017	US$312.7B	13.4%	US$505.2B	21.6%
2023	US$472.9B	—	US$427.2B	—
2025	US$534.3B	15.6%	US$308.7B	9.0%
Jan–Aug 2026	US$419.3B	17.2%	US$183.5B	7.5%

Import value is not the same as manufacturing capacity. On the World Bank's World Development Indicators, Mexico's 2025 manufacturing value added (MVA — the value factories add to the materials and components they buy) was US$366.1 billion, against China's US$4,822.7 billion. Mexico ships a great deal to the US because its factories sit inside a North American supply chain and assemble goods from components made elsewhere, much of them in Asia.

What Mexico supplies, and how much of it is assembly

Kearney's 2026 Reshoring Index reports that US imports from Mexico rose 8% from 2024 to 2025, "primarily driven by a $47 billion increase in Computer & Electronics Products." Kearney adds that much of that gain "is still concentrated in downstream assembly" and that Mexico relies on Asian countries for upstream components; Mexico's own imports from Asia rose 17.7% in 2025. Kearney is a consultancy and its index is not official statistics, but the pattern it describes appears in product-level trade data too.

US-reported data in the UN Comtrade database show where Mexico leads or is close to China. These are 2025 shares of US imports on a CIF basis (cost, insurance and freight included), subject to revision:

Motor-vehicle parts (HS 8708): Mexico 41.6% (US$35.23 billion); China 10.4%.
Medical instruments (HS 9018): Mexico the largest supplier at US$12.94 billion; China fifth with 5.4%.
Machinery parts not elsewhere specified (HS 848790): Mexico 24.1%; China 6.8%.
Other articles of aluminum (HS 761699): Mexico 21.6%; China 24.1%.
Other articles of plastics (HS 392690): Mexico 19.0%, up from 14.9% in 2018; China 33.7%.
Other articles of iron or steel (HS 732690): Mexico 18.3%, up from 13.0% in 2018; China 28.1%.

Chinese content also reaches the US through Mexico. USTR's 2026 report to Congress on USMCA autos found that China's share of the value-added content in Mexico's transport-equipment imports rose from 4.5% in 2017 to 7.1% in 2024. That is a value-added measure, not a direct import share, but it shows the direction of travel.

USMCA rules of origin: what makes a good Mexican

The United States–Mexico–Canada Agreement (USMCA, the successor to NAFTA) gives duty-free or preferential treatment only to originating goods. A good originates only if it meets the product-specific rule of origin in USMCA Chapter 4 and its annex. That rule is usually a tariff-shift test (non-North American inputs must change tariff classification during production), a regional value content (RVC) threshold (a minimum share of the good's value must come from North America), or both. US origin for USMCA goods follows 19 CFR Part 102 rather than the general substantial transformation test. Assembling Chinese parts in Mexico does not automatically confer USMCA origin, and the importer claiming preference needs a certification of origin.

The automotive rules show how demanding the thresholds can be (CRS In Focus IF12082, updated 23 June 2026):

75% RVC for passenger vehicles, light trucks and core parts, up from 62.5% under NAFTA.
65–70% for other vehicles and parts, with heavy trucks phasing in to 70% by 2027.
Labor value content of 40–45%: that share of production value must be made by workers earning at least US$16 an hour.
70% of a vehicle maker's steel and aluminum purchases must originate in North America.

A USMCA dispute panel ruled against the US in December 2022 on how the value of core parts is "rolled up" into a vehicle's content calculation. Goods that do not originate pay normal US duties, and any applicable US tariff actions, according to their country of origin under CBP rules.

Mexico's own tariffs on Chinese inputs

Since 2024, Mexico has made it costlier to bring Chinese components in for assembly. Two decrees matter. Both were published in the DOF (Diario Oficial de la Federación, Mexico's official gazette, where laws and decrees take legal effect):

April 2024 (temporary): a decree published on 22 April 2024 and effective 23 April 2024 imposed import tariffs of 5% to 50% on 544 HS codes, covering steel, aluminum, textiles, apparel, footwear, wood, plastics, chemicals, paper, ceramics, glass, electrical material, transport equipment, musical instruments and furniture. It ran to 23 April 2026 (US International Trade Administration).
December 2025 (permanent): a reform of the tariff schedule of the LIGIE (Ley de los Impuestos Generales de Importación y de Exportación, Mexico's general import and export duty law), approved by Congress on 10 December 2025, signed on 23 December, published in the DOF on 29 December 2025 and effective 1 January 2026 (DOF decree).

The 2026 reform raises Mexico's general, or MFN (most-favored-nation), rates. It therefore applies in practice to countries without a free trade agreement with Mexico — chiefly China, and also India, South Korea, Thailand, Indonesia and others according to press reports. FTA partners keep their preferential rates. Most affected lines rise to 25% or 35%, some to 30%, and passenger vehicles (HS 8703) to 50%.

Two details are unsettled in the sources. The number of lines is reported as about 1,463 by the Economy Ministry and press; a rough parse of the DOF text gave about 1,480, which is not a reliable count. And Mexico News Daily dated DOF publication to 30 December, while the DOF itself is dated 29 December 2025. Transitional article 4 lets the Economy Ministry create mechanisms for importing inputs from non-FTA countries "to guarantee the supply of inputs." How any such mechanism, or IMMEX (Mexico's program that lets manufacturers import inputs duty-deferred for export production), interacts with the new rates was not confirmed in an official instrument for this page.

The July 2026 USMCA joint review

On 1 July 2026 the USMCA Free Trade Commission held the six-year joint review required by Article 34.7. USTR Ambassador Greer stated that "the United States did not agree to renew the USMCA in its current form… As a result, the USMCA is not renewed," and that "the Agreement remains in force" (USTR statement, 1 July 2026).

Under Article 34.7, the consequence is a series of annual joint reviews for the rest of the agreement's term. Unless all three parties confirm an extension, the USMCA expires on 1 July 2036; an extension can still be confirmed at any time. Mexico and Canada confirmed support for a 16-year extension. Tariff preferences and rules of origin were not changed by the review (White & Case, 2 July 2026). US–Mexico bilateral rounds took place on 28–30 May, 16–17 June and in the week of 20 July 2026; their outcomes after July 2026 had not been confirmed for this page.

For an importer, the review introduced uncertainty rather than a change in duty. The agreement now has an end date of 1 July 2036 unless it is extended, and each annual review is a point at which the three governments revisit it.

US tariffs on Mexican goods as of October 2026

Kearney estimates that the effective US tariff rate on Mexican imports in 2025 (duties collected divided by customs value) was 12.8–13.8%, against announced rates of 25–50%. That estimate covers calendar 2025, before the Supreme Court held on 20 February 2026 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorize tariffs; IEEPA duties stopped being collected on 24 February 2026. A 10% Section 122 surcharge on all countries followed and expired on 23 July 2026.

From 24 July 2026, USTR's Section 301 forced-labor action imposed an additional 10% duty on products of 17 economies including Mexico, and 12.5% on products of China. Goods covered by Section 232 — including articles of steel, aluminum and copper, and passenger vehicles, light trucks and parts — are exempt from that layer but carry their own Section 232 duties. How the forced-labor notice treats USMCA-originating goods was not confirmed in the research for this page; an importer should check the notice's annexes or ask a licensed customs broker before assuming either answer.

Constraints on Mexican capacity

Kearney's 2026 index concludes that nearshoring growth in Mexico "is no longer guaranteed." It identifies four constraints: utilities and logistics capacity that vary by industrial cluster; labor in leading hubs that is "significantly more expensive"; security; and judicial reform, which weighs on investor confidence. It also reports that industrial construction — new factory and warehouse floor space being built — fell to 4.2 million square meters at the end of the fourth quarter of 2025, down 30% from 2024. Less construction means less ready-built space for new entrants to lease or buy.

The USMCA review adds a fifth factor. Investors who expected a 16-year renewal in July 2026 now face annual reviews instead.

Common mistakes with Mexico nearshoring

Assuming "made in Mexico" means duty-free. Only goods that meet the USMCA rule of origin for their product qualify for preference.
Assuming Chinese inputs can be routed through Mexico cheaply. Since 1 January 2026 many such inputs face Mexican MFN rates of 25–35%, and 50% for passenger vehicles.
Treating the July 2026 review as termination. The agreement remains in force, with annual reviews, until at least 1 July 2036 unless extended.
Using announced tariff rates as effective rates. Kearney's 2025 estimate for Mexico was 12.8–13.8% effective against 25–50% announced, and the IEEPA layers have since ended.
Confusing trade value with factory capacity. Mexico's manufacturing value added is about 7.6% of China's (WDI 2025), and much of its export growth is assembly of imported components.

Frequently asked questions

Is Mexico bigger than China as a US supplier?

Yes. Mexico has been the largest source of US goods imports since 2023, when the US imported US$472.9 billion from Mexico against US$427.2 billion from China (Census). In 2025 the figures were US$534.3 billion and US$308.7 billion, and Mexico's share of US goods imports reached 17.2% in January to August 2026.

Did the USMCA end in July 2026?

No. At the 1 July 2026 joint review, the United States declined to renew the USMCA in its current form, which triggers annual joint reviews. USTR stated that the agreement remains in force. It runs to 1 July 2036 unless all three countries confirm an extension, which can still happen at any time. Tariff preferences and rules of origin were unchanged.

Does Mexico put tariffs on Chinese imports?

Yes. A LIGIE reform published in the DOF on 29 December 2025 and effective 1 January 2026 raised Mexico's general import duties on about 1,463 tariff lines, mostly to 25% or 35% and to 50% for passenger vehicles. It applies in practice to countries without a free trade agreement with Mexico, chiefly China.

Are goods made in Mexico duty-free into the US?

Only if they qualify as originating under USMCA. Each product has its own rule of origin, usually a tariff-shift test, a regional value content threshold, or both, and the importer needs a certification of origin. Goods assembled in Mexico from Chinese parts that do not meet the rule pay normal US duties and any applicable tariff actions.

What are the USMCA auto rules of origin?

Passenger vehicles, light trucks and core parts need 75% regional value content, up from 62.5% under NAFTA. Labor value content of 40–45% must come from workers earning at least US$16 an hour, and 70% of a vehicle maker's steel and aluminum purchases must be North American. Source: CRS In Focus IF12082, updated 23 June 2026.

Is nearshoring to Mexico slowing down?

There are signs of it. Kearney's 2026 Reshoring Index says Mexico's nearshoring growth "is no longer guaranteed," citing USMCA uncertainty, utilities and logistics, labor costs in leading hubs and security. Industrial construction fell 30% in 2025, to 4.2 million square meters. US imports from Mexico still rose 8% in 2025.

Nearshoring to Mexico