Borderlands Mexico: Diverse supply chain can limit tariffs' impact, expert says

Yahoo

09-02-2025

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Diverse supply chain can limit tariffs' impact, expert says; CPKC launches Texas cross-border railway bridge; Canada-based components maker expands Mexico plant; and Mexico repeals ban on imports of genetically modified corn.
With tariffs on imports from Canada and Mexico a possibility in less than 30 days, supply chain operators should focus on strategies to reduce the impact of increased duties, said Vinny Licata, head of logistics at Fictiv.
Licata said supply chain diversification — which includes everything from relocating entire manufacturing operations to embracing multicountry assembly strategies — is key to mitigating the effect of tariffs or other types of disruptions.
'We've had a lot of things happen in the last five years or so. We have had the pandemic, we have a lot of geopolitical issues, we've had a lot of weather events that have caused a lot of havoc all over the world,' Licata told FreightWaves in an interview. 'I think these supply chains need to be diversified, whether it's globally or even domestically. You need to have that.'
President Donald Trump signed an executive order on Feb. 1 imposing 25% tariffs on imports from Canada and Mexico, along with a 10% tax on Chinese goods. The proposed tariffs would apply to almost all imports from Mexico and Canada, with the exception of Canadian energy imports, which would face a 10% levy.
On Monday, the Trump administration suspended the tariffs against Mexico and Canada for at least a month to conduct negotiations.
The 10% tariff on all goods from China went into effect at 12:01 a.m. EST on Tuesday.
San Francisco-based Fictiv is a global operation for custom manufacturing, from prototype to low-volume production.
The company has an AI-powered global manufacturing platform that includes production facilities in the U.S, Mexico, India and China.
Licata said mitigating tariffs through diversification requires strategic planning across a company's entire supply chain.
'I think being diversified allows companies to be able to go to those lower-tariff areas, whether it's in other global countries or domestically, to be able to to meet the requirements that they need, their cost requirements, and everything else,' Licata said.
Trump on Feb. 2 banned all low-value, e-commerce parcels from China from receiving duty-free benefits under the de minimis entry program. On Friday, it was announced that he had delayed tariffs on de minimis packages from China until U.S. authorities can confirm that procedures and systems are in place to process packages under the new rules.
Trump also said on Friday he plans for tariffs on more countries next week, but he did not identify which countries.
'I'll be announcing that, next week, reciprocal trade, so that we're treated evenly with other countries,' Trump said, according to Reuters. 'We don't want any more, any less.'
In addition to manufacturing diversification, Licata said actionable strategies to manage the proposed tariffs from the Trump administration include everything from applying for tariff exclusions and optimizing product classifications to using duty drawbacks and diversifying suppliers.
'Utilizing the first sale — if you're purchasing products from other countries, you don't have to pay the transfer price, you could pay that initial first sales price if you meet the right regulations,' Licata said. 'It's a hard setup, but what that does is it lowers the amount that you're able to get duties on. We're mitigating that duty impact tariff.'
Multicountry assembly operations are another way to reduce disruptions in a company's supply chain, Licata said.
'I think having a multicountry manufacturing base is extremely important. I think advanced manufacturing is going to come into play as well in the future, to help companies be able to adjust quicker to these geopolitical issues, to these tariff issues as you go forward,' he said. 'Being able to change your product line from alcohol to a hand sanitizer – being able to make those adjustments quickly is a competitive advantage.'
Companies can have a network of manufacturers on multiple continents to give themselves a competitive advantage, according to Licata.
'I may be targeting China today, but maybe I could go to India, or maybe I'm targeting Mexico, or I can go to China,' Licata said. 'There's different ways to be able to combat that. We also need diversification in the U.S. I think you're going to need that presence in the United States as you go forward to show investment, to show that, 'Hey, we're looking to have investments in the right areas. Having a U.S. presence is going to be important in the future as well.'
Canadian Pacific Kansas City (CPKC) opened the $100 million Patrick J. Ottensmeyer International Railway Bridge on Thursday.
The freight rail bridge, which connects Laredo, Texas, to Nuevo Laredo, Mexico, is expected to double the volume of goods moved by railroad between the U.S., Mexico and Canada.
The CPKC (NYSE: CP) bridge allows trains to operate in both directions at the same time and has the capacity for 3,500 daily loaded cars.
In 2024, the Laredo Customs District processed more than 300,000 railcar shipments. In 2023, more than $95 billion worth of freight moved on railways between the U.S. and Mexico, according to the Census Bureau.
Laredo was the top port of entry for rail freight between the U.S. and Mexico, followed by ports in Eagle Pass and El Paso, Texas.
Top rail freight between the U.S. and Mexico includes auto parts, minerals, fuels, computers and computer parts.
'Now, with this railway bridge … there will be the possibility of transporting goods from the center of the country, from Mexico to Canada. It is the symbol of the trade agreement between the three countries,' Mexican President Claudia Sheinbaum said during her daily news conference on Wednesday.
Exo-s plans to invest $14.6 million to expand its plant in the Mexican city of San Juan del Rio, according to MexicoNow.
The expansion, which will create 100 jobs, will increase production capacity to meet growing demand in the automotive sector, according to officials.
The company currently exports 30% of its production to the United States and seeks to strengthen its presence in the Mexican market with this expansion.
Montreal-based Exo-s is a supplier of injection and blow molded automotive and specialty products.
The company has four plants, including one in Mexico, one in Canada and two in the U.S.
Authorities in Mexico recently suspended provisions restricting imports of genetically modified (GM) corn into the country.
The end of Mexico's ban on GM corn follows a Dec. 20 ruling by a dispute panel under the United States-Mexico-Canada Agreement. The decision overturns a decree issued by former Mexican President Andrés Manuel López Obrador that aimed to protect native white corn species.
The resolution to end the ban was published in Mexico's Federal Official Gazette and signed by Minister of Economy Marcelo Ebrard, in compliance with the panel's recommendations.
The USMCA dispute originated after the U.S. filed a formal complaint in February 2023.
Mexico is the largest importer of U.S. corn, both yellow and white. In 2023, Mexico imported a total of $5.3 billion worth of U.S. corn.
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