Mexico's Nearshoring Incentives: A Bid to Curb Chinese Imports

Mexico's President, Claudia Sheinbaum, has announced a series of incentives aimed at promoting nearshoring and reducing the country's dependence on Chinese imports. The decree, published on October 11, 2023, offers attractive fiscal incentives to Mexican exporting companies and those recently incorporated or already operating. The incentives center around two key advantages: the immediate deduction of investments in new fixed assets and an additional deduction for increases in workforce training expenses.

The immediate deduction of investments in new fixed assets is a promising opportunity for Mexican companies looking to offer their products and services to specific sectors in Mexico. The beneficiaries of such incentives are Mexican exporting companies, recently incorporated or those already operating. The sectors that benefit from the incentives include products intended for human and animal nutrition, fertilizers, raw materials for the pharmaceutical industry, electronic components, semiconductors, modems for computers and telephones, machinery for watches, medical equipment, batteries, accumulators, gasoline, hybrid and alternative fuel engines for cars, vans and trucks, electrical and electronic equipment, internal combustion engines, turbines and transmissions for aircraft, non-electronic equipment, devices for medical use, disposable material for medical use and optical items for ophthalmic use.

The complete list and the official decree can be found here:

The incentives are also granted to Mexican taxpayers who produce and export audiovisual works that are protected by copyright under applicable law. For further questions or if you encounter any problems with Mexican Customs, please contact Manuel Velazquez at Manuel.Velazquez@trade.gov.

Mexico's President, Claudia Sheinbaum, has announced a plan to reduce the country's imports from China in a bid to support local industry and align herself with the US as a trade partner. Amid a shrinking share of North American exports to the world, Sheinbaum stated that Mexico would offer incentives for nearshoring, including tax deductions, and develop plans for individual sectors for how to increase the local content of goods made in Mexico. The new decree on incentives for both Mexican and foreign firms will be published on January 17, 2024.

To contact the reporter on this story: Maya Averbuch in Mexico City...


[Insert chart showing the impact of the incentives on Mexican exports to China and the projected increase in U.S. exports to Mexico]


The incentives are part of a broader effort by the Mexican government to promote nearshoring and reduce dependence on Asian imports, especially from China. The government aims to increase Mexico's manufacturing capacity and seize the nearshoring opportunity by proactively seeking foreign investment. The incentives are expected to benefit key sectors such as semiconductors, automotive (especially in electromobility), electrical and electronic equipment, medical devices and pharmaceuticals, agribusiness, and human and animal food.

The Mexican government's attitude toward China has shifted, with the current administration starting from day one by saying they will be keeping an eye on Asian imports. This is a significant change from previous administrations, which often began their terms thinking they could establish a new trade relationship with China. The Mexican government is now focused on reducing reliance on imports from Asia, with low-cost Chinese import stores thriving in Mexico.

The import substitution plan is supported by both tariffs and regulations that help protect Mexican industry. The Mexican government is encouraging companies to substitute a significant portion of the imports they receive from China and other Asian countries with locally-made products. The government is also supporting the development of new technologies and innovations in key sectors, such as semiconductors, to enhance Mexico's competitiveness in the global market.

In conclusion, Mexico's nearshoring incentives are a strategic move by the Mexican government to reduce dependence on Chinese imports and promote local industry. The incentives, which include immediate deductions for investments in new fixed assets and additional deductions for workforce training expenses, are expected to benefit key sectors such as semiconductors, automotive, electrical and electronic equipment, medical devices and pharmaceuticals, agribusiness, and human and animal food. The Mexican government's focus on nearshoring and import substitution is a positive step towards enhancing Mexico's competitiveness in the global market and strengthening its trade relationship with the US.