A Binational Manufacturing Advantage: Leveraging the U.S.–Mexico Partnership

At Prince Manufacturing, we offer integrated solutions across both the United States and Mexico, giving our partners the flexibility to optimize their supply chains, reduce costs, and navigate today’s shifting global trade environment with confidence.

In particular, our Mexican operations under the maquiladora model have become a strategic asset for OEMs responding to rising global tariffs and evolving trade dynamics. By manufacturing in Mexico, companies can maintain proximity to the U.S. market while benefiting from favorable trade agreements, reduced labor costs, and efficient cross-border logistics.

This binational capability allows us to tailor each manufacturing solution—whether it’s built in the U.S., Mexico, or through a hybrid approach—to maximize cost efficiency, mitigate risk, and support scalable growth for our clients.

In a global economy that demands resilience and adaptability, Prince’s U.S.–Mexico footprint delivers the best of both worlds: quality, control, and cost competitiveness, all backed by decades of contract manufacturing expertise.

As global trade tensions and protectionist measures reshape global supply chains manufacturers now view Mexico’s maquiladora industry and USA based locations as powerful strategic manufacturing alternatives. The tariff policies implemented by Donald Trump’s administration against China and other major trade partners produced extensive consequences and brought uncertainty to global manufacturers. In the midst of global economic disruption, Mexico’s maquiladora system presents U.S.-based and international companies with a manufacturing solution that stands out as especially advantageous.

The close location to the U.S. market combined with trade-friendly policies and low labor costs allows maquiladoras to integrate deeply into North American supply chains which makes them a more appealing manufacturing option than Asia and other regions. Mexico emerges as a top choice for companies seeking to minimize operational risks and establish partnerships that bring stability and cost savings. This article examines Mexico’s maquiladora industry’s exploitation of global tariffs during the Trump administration and its lasting competitive advantages compared to non-preferential trade region manufacturers.

Understanding the Maquiladora Model

Foreign-owned manufacturing plants known as maquiladoras import materials and components without paying duties and send their finished goods mainly to the United States. Maquiladoras based near the U.S. border in northern Mexico serve as the main foundation for manufacturing collaboration between the United States and Mexico. The IMMEX program oversees the maquiladora industry by providing export-oriented manufacturers with various tax and tariff benefits.

Maquiladoras operate under preferential trade rules which enable them to streamline operations and reduce both tax liabilities and tariffs provided products reach export markets within the required timeframe. The model supports operational efficiency while improving cost management and enabling companies to access the United States—one of the biggest consumer markets globally.

The Tariff Landscape Under Trump

President Trump implemented extensive tariffs on imported goods to decrease U.S. trade deficits while encouraging American manufacturing jobs to return home. Key measures included:

• A 25% tariff was applied to Chinese industrial goods totaling $250 billion.
• The Trump administration implemented 10% tariffs on aluminum imports and 25% tariffs on steel imports from countries like Canada and the EU.

The administration initially threatened to impose broad tariffs on Mexican imports but later retracted the tariffs following negotiations.

The tariffs aimed to punish overseas producers and encourage domestic production but instead caused interruptions in global supply chains and cost increases for U.S. businesses while creating unpredictable policy conditions which complicated long-term business planning. Many multinational manufacturers chose to relocate production to Mexico instead of returning operations to the United States because maquiladoras provided both geographical closeness and protection against the tariff storm.

Mexico’s Strategic Advantage in a Protectionist World

1. Trade Preference via USMCA

Mexico benefits strategically from its participation in the USMCA trade agreement established in 2020 to replace NAFTA. The revised pact maintains and updates trade connections between Canada, Mexico, and the United States. Key provisions that benefit maquiladoras include:

• The USMCA safeguards member countries against unexpected and one-sided tariff implementations.
• The USMCA demands higher regional content standards for sectors such as automotive manufacturing.
• The agreement enhances competitiveness through its promotion of labor standards and environmental regulations.

Manufacturers based in China, Vietnam or Europe faced new steep tariffs and changing U.S. trade regulations unexpectedly. Under USMCA, maquiladoras maintained their privileged trade access to the United States market. The situation provided companies with a compelling reason to move production operations nearer to the U.S. while keeping their production costs low.

2. Reduced Tariff Exposure

Companies manufacturing in Mexico under USMCA and IMMEX frameworks can bypass the significant tariffs that affect manufacturers from outside North America. For example:

• A U.S.-based electronics company that sourced components or finished products from China encountered a 25% tariff during the trade war under Trump.
• The company could move its production operations to a Mexican maquiladora and send the final product to the U.S. without paying tariffs.

Maquiladoras gained a decisive cost advantage by avoiding punitive tariffs during Trump’s administration and maintained this advantage as trade tensions persisted worldwide. Manufacturers strategically relocated their production facilities to countries with strong U.S. trade relationships to mitigate potential regulatory risks and tariff burdens.

Samsung Electronics demonstrates this business approach in its operations. The company fared better than competitors when facing U.S. tariffs because it produced most of its North American TVs in Mexico. Samsung’s visual display business president Yong Seok-woo explained how the company used its Mexico production base to escape high U.S. tariffs while observing international trade developments. China experienced tariffs on TVs that reached 54% because of a new 34% tariff over a pre-existing 20% one while Mexico managed to avoid these tariffs which demonstrated the effectiveness of its maquiladora system. Full article: Samsung says TV business to be less affected by US tariffs due to Mexico output. 

3. Geographic Proximity to the U.S.

Global manufacturers faced multiple challenges beyond tariffs. The reliability of supply chains rose to prominence as a major concern during Trump’s trade war alongside the disruptions caused by the COVID-19 pandemic. Being close to the United States gives Mexico several unique benefits:

• Lower transportation and shipping costs
• Shorter lead times for just-in-time manufacturing
• Fewer customs-related and logistical delays
• Quality control and compliance become more manageable due to simplified oversight and site visit procedures.

Maquiladoras provide superior resilience and faster access to market compared to Asian manufacturing hubs. Manufacturers found these benefits essential because overseas shipments faced disruptions along with port backlogs and unpredictable border regulations.

4. Competitive Labor Costs and a Skilled Workforce

Even if tariffs are not factored in Mexico maintains its status as an affordable place for labor-intensive manufacturing operations. Although Mexican workers earn more than those in Vietnam and Bangladesh, their salaries remain significantly below American wage levels. Mexico offers a highly skilled industrial workforce that thrives in advanced manufacturing sectors including the following sectors:

• Automotive
• Aerospace
• Electronics
• Medical devices and life sciences

Technical training programs in Mexico together with educational public-private partnerships and vocational schools have built a capable talent pool which serves sophisticated industry requirements. Maquiladoras excel at complex assembly tasks because they provide both cost-effective solutions and expert knowledge while being close to the U.S. market.

5. Established Supply Chain Infrastructure

The manufacturing industry in Mexico maintains decades-long experience serving the U.S. market. The U.S.-Mexico border features established infrastructure components which include:

• Tier-1 and Tier-2 suppliers
• Distribution centers and logistics firms
• Technical service and maintenance providers
• Business parks and industrial real estate developments

This ecosystem enables quicker setup times, more efficient operations and better integration with production systems based in the United States. Manufacturers moving from Asia or Europe to Mexico usually benefit from quicker operational setup because of the existing robust infrastructure.

Conclusion: Tariffs Drove Change— Mexico Manufacturing Delivered Solutions

Under the Trump administration United States trade policies sought to return manufacturing operations to domestic soil while penalizing countries that practiced unfair trade methods. These policies transformed the worldwide manufacturing scene but also produced unexpected side effects. The combination of rising expenses, supply chain unpredictability, and tariff risks drove organizations to explore regional options that could deliver both security and operational efficiency.

Mexico’s maquiladora sector expanded to address this manufacturing challenge. Because of USMCA trade preferences and IMMEX tariff exemptions alongside low labor costs and robust logistics infrastructure as well as nearness to the U.S., maquiladoras established themselves as a strategic answer during times of increasing global protectionism and remain so.

The maquiladora model represents one of today’s most flexible and beneficial manufacturing choices as global trade evolves and businesses seek resilience alongside regional integration and cost-efficiency. Companies aiming to serve the U.S. market while reducing risk should recognize Mexico’s maquiladora industry as a vital long-term strategic asset beyond just a contingency option.