Latest news with #JorgeGonzalezHenrichsen
Yahoo
9 hours ago
- Business
- Yahoo
Borderlands Mexico: Renegotiating USMCA may boost North American trade
Borderlands Mexico is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Renegotiating USMCA may boost North American trade; Automotive supplier opens manufacturing facility in Guanajuato; Humanscale expands manufacturing operations in Nogales; and New import cold storage facility slated for Texas border city. The United States-Mexico-Canada Agreement will mark its fifth anniversary on July 1. The importance of the USMCA cannot be overstated as it governs trade between the U.S. and its two most significant trading partners, supporting over $1.5 trillion in annual commerce. Since taking office for his second term, President Donald Trump has indicated a desire to renegotiate or possibly terminate the USMCA, after previously touting the agreement as a significant economic USMCA faces a critical juncture as it approaches its first six-year review in 2026, though negotiations are already underway. Mexican senior officials have been making regular visits to Washington since early 2023. Jorge Gonzalez Henrichsen, CEO of The Nearshore Co., said accelerating renegotiations of the USMCA may bring much-needed certainty to investors. 'What makes me the most happy about it being revised earlier … is that it will bring certainty, because the Trump administration has created such a level of uncertainty that investment really froze from November [2024] to April [2025] companies that were thinking of going to Mexico,' Henrichsen told FreightWaves in an interview. He said while it's unclear what the Trump administration will do with the USMCA, the trade agreement has been a success in terms of creating more commerce among the three was the top U.S. trade partner for the second consecutive year in 2024, totaling a record-breaking $840 billion. Canada ranked No. 2 for trade with the U.S. in 2024 at $761 billion, and China ranked third at $582 billion. The Nearshore Co., based in Brownsville, Texas, is an international trade and development firm that helps companies set up shelter operations in Mexico. 'The North American Free Trade Agreement (NAFTA) was signed in 1994, and the USMCA was 2020, so after 26 years, the economy changed a lot, and I do think that moving from NAFTA to USMCA was positive,' Henrichsen said. 'I think for everyone, it was positive.' One of the biggest changes from NAFTA to the USMCA involved automotive content rules. Under NAFTA, regional automobile content requirements stood at 62.5%, but USMCA raised this threshold to 75% with new wage requirements. It meant that 75% of the vehicle's parts must be sourced from the U.S., Canada or Mexico, or all three. 'One of the drivers for nearshoring to Mexico during COVID was that a lot of these automotive suppliers and original equipment manufacturers were from Asia,' Henrichsen said. 'So you had these OEMs saying, 'I have to move from 62.5% to 75%. You have got to relocate to North America.' It was basically driven by that change, to comply with the local concept.' Labor rights provisions in Mexico were substantially strengthened in USMCA, driving labor reforms in the country that aimed to improve worker protections.'One of the other big changes between USMCA and NAFTA is the labor rights. We had a new labor reform, and now we have unions that are more democratic,' he said. The USMCA also introduced entirely new elements that were not part of NAFTA, including provisions on digital trade and e-commerce and a dispute resolution mechanism, Henrichsen noted. While he views the USMCA as a positive change from NAFTA, there is still room for improving the agreement, Henrichsen said. 'One of the things that I would like to see discussed is how the three countries can deepen the supply chain resilience and the North American competitiveness as a trade bloc,' Henrichsen said. 'I would say the No. 1 driver by far of companies that reach out to us is that they cannot find labor at competitive costs and in large numbers in the U.S. So they're looking to Mexico to find this labor.' While Mexico may have lower labor costs than the U.S. and Canada, it still faces challenges with infrastructure and security. If the U.S., Mexico and Canada can work together as a trade bloc, then all three countries could benefit, Henrichsen said. 'Mexico has big challenges on infrastructure, for example … power, electricity generation and transmission. And so why don't we work as a team,' Henrichsen said. 'Like Mexico says, 'Guys, we can provide labor in Mexico for U.S. companies, for Canadian companies. But, we need support … for infrastructure, bridges to cross to the U.S.' All that kind of nearshoring supply chain thinking as a bloc … is on my wish list.' With an investment of $50 million, China-based TYW Manufacturing recently opened a plant in Irapuato, Mexico. The facility will generate about 500 jobs and manufacture electronic dashboards for Kia and Stellantis targeting markets in South Korea and the U.S., according to a news release. Irapuato is in central Mexico in the state of Guanajuato, a hub for automotive manufacturing in the country. TYW Manufacturing is a subsidiary of Heilongjiang TYW Electronics, a company based in Suihua, China, according to Mexico Business News. New York-based Humanscale recently completed a $30 million expansion of its operation in Nogales, Mexico. The expansion creates 300 jobs and adds a 3,000-square-foot facility that will produce metal components – work previously performed in Asia. Humanscale is a high-end office furniture manufacturer. The company has four factories, including in the U.S., Ireland and Mexico. The company has been in Nogales since 2017. The Mexican city is directly across the border from Nogales, Arizona. Public officials and business leaders recently held a groundbreaking to inaugurate construction of a fresh produce cold storage warehouse along the Texas-Mexico border. Known as the 'From Mexico Cold Storage Warehouse,' the facility will feature 10 high-efficiency loading docks and temperature-controlled storage rooms. It will be designed to support growing demand in cross-border produce distribution,' according to a news release. 'This new facility will bring innovation, efficiency, and opportunity to our produce district, and we are proud to welcome From Mexico as a valued partner to our thriving city as we continue to invest in cold storage infrastructure,' Victor Perez, president and CEO of the Pharr Economic Development Corp., said in a statement. Officials did not provide a timeline for the facility's construction. The Pharr-Reynosa International Bridge handles over 65% of the nation's fresh produce imports from Mexico, contributing to more than $47 billion in annual trade. The post Borderlands Mexico: Renegotiating USMCA may boost North American trade appeared first on FreightWaves.
Forbes
05-05-2025
- Business
- Forbes
Tariffs And Nearshoring: Uncertainty, Strategy And A Path Forward
Jorge Gonzalez Henrichsen, Head of Business Development and Co-CEO at The Nearshore Company. If there's one word that best describes the current climate around U.S.-Mexico trade, it's uncertainty. Ever since former President Trump announced plans to impose a 25% tariff on Mexican goods, companies with nearshoring strategies have been left wondering: What does this mean for my business? Should I keep moving forward with my plans in Mexico, or do I hit the brakes? As a company deeply dependent on cross-border commerce, we've spent countless hours speaking with clients, trade experts and customs brokers to get a sense of what's happening on the ground. What we're seeing is a tale of two extremes: Some companies are in full-blown panic mode, while others are taking a wait-and-see approach to see if the tariffs will stick around. The truth, as always, lies somewhere in between. One of the biggest challenges in navigating this tariff situation is that it isn't just about risk—it's about uncertainty. Businesses know how to manage risk. Insurance companies, for example, calculate and mitigate risk all the time. But uncertainty? That's a different beast. It makes planning nearly impossible. In prior years, many companies operating under the U.S.-Mexico-Canada Agreement (USMCA) paid limited attention to the declared value of goods crossing the border. Duties were zero or minimal, so as long as everything was documented correctly, there wasn't much reason to worry. (At the time of this writing, goods from Mexico that aren't covered by the USMCA, as well as steel, aluminum and automotives, are subject to 25% tariffs.) With the uncertainty surrounding tariffs, our clients are scrutinizing every detail—double-checking invoices, questioning valuation methods and seeking legal counsel to understand their true exposure. At the core of this debate is a fundamental question: Will these tariffs bring manufacturing back to the U.S.? It's hard to say. The U.S. is facing a shrinking working-age population, a trend that was previously offset by immigration. With legal immigration becoming more restrictive and increased efforts to reduce illegal immigration, some are expecting the labor shortage to become more pronounced. The reality is that no matter what happens with these tariffs, manufacturing companies still need a labor solution, so some might feel nearshoring is their best bet. Given all this uncertainty, what's the smartest path forward for businesses considering nearshoring? My advice is simple: Do the homework. Businesses that once had the luxury of being somewhat relaxed about cost structures can no longer afford to be. If you're considering nearshoring, conduct a deep financial analysis. Assume the worst-case scenario—a 25% tariff on the total declared value of your product—and determine whether your margins can still hold up. In early February, some said they believe that 25% tariffs on Mexican goods are unlikely to last. Regardless of whether any do, in the short term, we may see temporary disruptions. If you can survive a few months of uncertainty, then pressing forward with nearshoring may still be a viable long-term strategy. If the math doesn't work with a 25% tariff, you may need to explore other options. That could mean delaying your move to Mexico, considering automation investments or looking at alternative manufacturing locations. However, bear in mind that tariffs and trade restrictions will impact businesses everywhere, not just in Mexico. Despite all the noise and political maneuvering, one thing remains clear: Nearshoring can still be a valid long-term solution for North American companies facing labor shortages and supply chain challenges. Even with short-term uncertainty, the fundamentals haven't changed. Brands will need to take the long view and ensure the benefits of nearshoring outweigh the risks. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
