A new report by Bank of America suggests that tariffs imposed by President Trump’s administration may lead companies to relocate their manufacturing operations to nearby countries like Mexico, rather than bringing them back to the US.
While tariffs have already created around 2 million new jobs in the US over the past decade and a half, manufacturing still accounts for only about 8% of the US workforce. The report found that most companies are likely to shift production to countries with better relations and lower costs, such as Mexico.
According to the Bank of America Global Research survey, only 20% of respondents expect tariffs and policy changes to result in significant “reshoring” – the relocation of manufacturing operations from abroad to the US. Instead, nearly two-thirds said that companies will focus on “nearshoring”, which involves moving production closer to the US or to countries with better relations.
Mexico is expected to be a major beneficiary of this trend, thanks to its geographical proximity and cost efficiency. The report notes that Mexico has already been subject to tariffs by Trump’s administration, although some have been delayed.
Advances in automation may also undercut job creation in manufacturing, according to the report. Most new manufacturing jobs in the US are focused on industries such as electronics, biotechnology, and metals and mining, which will likely be automated.
In contrast, nearshoring is expected to benefit countries with better relations and lower costs, such as Vietnam and India. The Bank of America report suggests that nearshoring may become a more significant trend in the coming years, driven by tariffs and policy changes.
Source: https://www.investopedia.com/u-s-tariffs-are-a-big-win-for-mexico-report-finds-11749793