Supply Chain Resilience in the U.S.-China Trade Shift: Undervalued Logistics & Retail Plays

The U.S.-China trade war has reshaped global supply chains, favoring firms that can navigate geopolitical risks and capitalize on structural shifts. As trade flows pivot toward Mexico, ASEAN, and nearshored networks, undervalued logistics and retail companies are emerging as key beneficiaries. Here's why investors should pay attention—and where to look.

The New Trade Landscape: Why Logistics and Retail Matter

The U.S. has slashed its reliance on China, with Mexico now its largest goods supplier and ASEAN gaining ground. This shift isn't just about geography—it's a strategic realignment toward resilience. Companies that streamline cross-border logistics, reduce dependency on distant suppliers, and adapt to evolving consumer demand will thrive.

Key drivers:
1. U.S.-Mexico trade boom: Mexico's exports hit $44.4 billion in January 2025 (+5.5% YoY), fueled by USMCA's tariff-free framework.
2. ASEAN's role as a China intermediary: 25% of Vietnam's electronics exports now include Chinese value-added content, creating indirect supply chain ties.
3. Rising logistics costs: Tariffs, diesel prices, and labor shortages have pushed firms to optimize networks and adopt tech-driven solutions.

Logistics: The Unsung Heroes of Resilience

Logistics firms are the backbone of this shift. Those with regional expertise, tech integration, and scalability are positioned to outperform.

1. UPS (UPS): Leveraging AI and USMCA

UPS has long been a leader in global logistics, but its focus on AI and nearshoring makes it a standout play. Its tools like UPS Global Checkout and UPS Trade Direct® automate compliance and reduce tariff risks—a critical edge in today's volatile environment.

Why invest?
- USMCA advantage: Dominates cross-border U.S.-Mexico trade.
- Tech edge: AI-driven route optimization and real-time tracking cut costs.
- Diversification: Serves SMEs and multinationals alike, reducing concentration risk.

2. NovaLink: Mexico's Hidden Gem

NovaLink specializes in turnkey manufacturing and logistics solutions for SMEs in Mexico. Its facilities in border cities like Matamoros offer low-cost entry into U.S. supply chains, bypassing Asia's risks.

Why invest?
- Proximity to U.S. demand: Trucks cross the border in hours, not weeks.
- USMCA compliance: Streamlines cross-border trade for small businesses.
- Undervalued: Its niche focus and untapped growth potential make it a sleeper stock.

Retail: Riding the Nearshore Wave

Retailers that source locally or via nearshored supply chains are better insulated from disruptions. While no single retail stock is explicitly highlighted in the data, Mexico's retail sector offers opportunities.

Grupo Sanborns (SBOR): A Retail Play in Mexico's Growth Story

Mexico's retail sector is booming, driven by rising middle-class spending and U.S. cross-border shopping. Grupo Sanborns, a leading retailer with stores in electronics and home goods, could benefit from increased domestic consumption and proximity to U.S. markets.

Why invest?
- Local dominance: Captures Mexico's growing consumer base.
- U.S. ties: Serves cross-border shoppers, leveraging Mexico's trade advantages.
- Undervalued: P/E ratio of 8.5 vs. sector average of 12.

Risks to Watch

• Infrastructure gaps: Mexico's energy capacity and road networks need investment to sustain growth.
• Policy uncertainty: USMCA renegotiations or U.S. tariff hikes could disrupt trade flows.
• ASEAN competition: Rising costs and geopolitical risks in Vietnam/Thailand may limit their appeal.

Investment Strategy: Build a Resilient Portfolio

1. Core position: UPS for its global scale and tech-driven resilience.
2. Satellite plays: NovaLink for Mexico's SME boom and Grupo Sanborns for retail upside.
3. Hedging: Diversify with exposure to ASEAN logistics (e.g., Thailand's Kerry Logistics) as a secondary play.

Avoid: Over-leveraged retailers reliant on Asian supply chains or those ignoring nearshoring trends.

Conclusion

The U.S.-China trade war isn't ending—it's evolving. Investors who prioritize logistics agility, regional proximity, and supply chain diversification will outperform. UPS and NovaLink are prime examples of firms capitalizing on this shift, while Mexico's retail sector offers undervalued opportunities. As trade patterns solidify, these companies aren't just adapting—they're defining the next era of global commerce.

Invest wisely, and brace for the new supply chain reality.