Mexican President Claudia Sheinbaum has announced a set of tax and financial incentives to encourage nearshoring and a plan to further curb the entry of cheap Chinese imports. She presented the country’s industrial policy, Plan Mexico, to government officials and business leaders at the National Museum of Anthropology in the country’s capital.
The announcement comes a week before US President-elect Donald Trump’s inauguration. His plan to impose a 25% tariff on all imports from Mexico (which he says depends on its management of illegal migration and drug trafficking at the border) has raised tensions in the country as its $855bn (17.65trn pesos) trade relationship with the US is called into question.
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“Our objective is for people to know that, despite any future uncertainty, Mexico has a plan and is united going forward,” Sheinbaum said, alluding to the difficulties a Trump presidency may bring for the country.
The plan to increase nearshoring will be published in the coming days and in place until October 2030. It will allow for an “immediate deduction of new fixed assets” of between 59% and 89%. Companies focused on technology, research and development will receive the biggest financial breaks. The government will offer other support programmes for investors, through which they may provide land for project development and apply a special customs regimen.
“What isn’t made here can be made here. The Plan Mexico was very clear […] We have a trade agreement with the US and Canada that the president said is very important, so as long as we stick to the terms of the agreement, things will go well for us,” Francisco Cervantes, president of Mexico’s business coordinating council, CCE, said of the plan’s potential.
The president also said the US-Mexico-Canada trade agreement was the best tool the country had to compete with China. Mexico’s Finance Minister, Rogelio Ramirez de la O, highlighted that North America’s share of global trade had decreased while China’s had grown, emphasising the importance of strengthening the country’s competitiveness.
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By GlobalDataA month ago, Mexico imposed 35% import tariffs on the textile sector, which was largely perceived as an attempt to curb cheap Chinese imports. In the previous months, the government conducted raids in shopping centres known for selling cheap Chinese goods and announced a “cleaning” operation to tackle the flow of illegal merchandise.
Sheinbaum said the government had already identified 2,000 investment projects that could be drawn into Mexico that would be worth $277bn. Officials also highlighted the plan’s potential to grow North America’s gross domestic product (GDP) by producing locally.
“If North America replaces 10% of the imports we are getting from China, and we make them in North America, Mexico’s GDP would grow 1.2% more than it normally does, the US 0.8$ more and Canada 0.2% more,” according to Ramirez de la O.
Plan Mexico also aims to increase the country’s energy production capacity by around 16%, growing natural gas storage capacity, facilitating permits for power generators and increasing public-private collaboration in energy projects. The industrial policy targets five main industries: consumer goods, automobiles, information technology, tourism and energy.
The full draft of the new nearshoring incentives for domestic and foreign companies will be published on 17 January.
