Mexico’s President Claudia Sheinbaum announced January 13 a plan to reduce the country’s imports from China in a bid to support local industry and align herself with the U.S. and Canada as a trade partners.

Amid a shrinking share of North American exports to the world, Sheinbaum stated that Mexico would offer incentives for nearshoring, including tax deductions, and develop plans for individual sectors for how to increase the local content of goods made in Mexico.

The new decree on incentives for both Mexican and foreign firms will be published January 17. “What isn’t made here can be made here. The Plan Mexico was very clear,” Francisco Cervantes, president of the country’s business coordinating council CCE, said. “We have a trade agreement with the U.S. 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.”

North America’s share of global trade has declined, while China’s has increased, Finance Minister Rogelio Ramirez de la O said during the event, underscoring the importance for the region of replacing its imports from the Asian giant. “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 U.S. 0.8% more and Canada 0.2% more,” Ramirez de la O said. 

Sheinbaum said the U.S.-Mexico-Canada trade agreement, known as USMCA, is the best way to compete commercially with China. She expressed confidence that the deal, which is scheduled to be reviewed in 2026, will continue despite the tariff threats by incoming U.S. President Donald Trump. 

Trump has pledged to impose tariffs of up to 25% on Mexico and Canada if those countries don’t help to reduce the crossing of undocumented migrants and curb drug trafficking into the U.S. The Republican has also expressed concern that China is using Mexico as a back door to send cheap goods into the U.S., affecting local producers.

Sheinbaum, who spoke with Trump about Mexico’s progress against migration and drug trafficking during a November phone call, since taking office has initiated a campaign to combat unfair trade from Asian countries, including China, with tariffs on products that affect the domestic textile industry and seizures at shopping malls selling cheap goods that the government says were illegally imported into Mexico. 

Plan Priorities 

As a way to promote nearshoring, as the boom of factories moving to Mexico to be closer to the U.S. market is known, Sheinbaum’s government will announce tax deductions for local and foreign companies. These deductions, which will be higher for technology, research and development, will remain in place until October 2030. 

Sheinbaum also announced she would seek to grow Mexico’s total energy generation capacity by about 16%, with a focus on increasing the share of renewable energy sources in Mexico’s power matrix. Additionally, she’ll focus on growing Mexico’s natural gas storage capacity, streamlining permits for independent power generators, and publish rules for how the private sector can partner with state energy companies on projects.

Among the “Plan Mexico” priorities are to speed up the permit process for exporting manufacturers that import materials duty-free and boost the purchase of locally made goods.

As part of that plan, Mexico wants, by 2030, to  increase the percentage of Mexico-made components in each vehicle to 15%.

Mexico also seeks to increase public and private investment in the country to more than 25% of gross domestic product, Sheinbaum said without specifying in which areas the government would seek to increase spending.Reducing imports from China “is a challenge but it is feasible,” said Antonio Ruiz, of the Compliance & Government Liaison Office for Ciudad Juarez-based manufacturer TECMA. “We can manage it. Canada, the U.S. and Mexico are each passing through political processes, and coming to terms with their differences, but together we can manage.”