U.S. nearshoring doesn’t automatically benefit Latin America

Expectations that region will attract massive investments as a result of a U.S.-China decoupling will likely turn out to be overly optimistic

nearshoring china Port of Manzanillo, Mexico. Even Mexico, far better placed to attract U.S. companies concerned about the geopolitical risks of depending on China, has not seen a significant increase of manufacturing exports to the U.S. yet — contrary to countries like Vietnam and Taiwan, which so far seem to be the biggest beneficiaries of U.S. attempts to reduce its economic dependence on China. Photo: Ungureanu Catalina Oana/Shutterstock
Port of Manzanillo, Mexico. Not even Mexico has seen a significant increase of manufacturing exports to the U.S. as a result of a nearshoring push. Photo: Ungureanu Catalina Oana/Shutterstock

The rise of geopolitical tensions between the U.S. and China, the Covid pandemic, and, most recently, the Russian invasion of Ukraine have led to a growing interest in the U.S. in building more resilient supply chains and promoting so-called “nearshoring” or “friend-shoring” — the relocation of U.S. manufacturing from China and other rivals to regions considered more politically secure, in an effort to reduce economic reliance on geopolitical competitors. 

In this context, a growing number of analysts have argued that the potential reordering of value chains provides an opportunity for Latin America to attract greater U.S. investment. 


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