Companies in Nuevo León opt for discreet fund allocation to dodge U.S. reviewal oversight
In the past few years, the state of Nuevo León has witnessed a significant surge in foreign direct investment (FDI) in its auto parts sector, with over $73 billion worth of investments announced since 2021, according to the state government. This influx of investments has been partly attributed to the USMCA free trade agreement, which has provided tariff exemptions on steel and aluminum for companies that comply with strict rules of origin, requiring 75% of a vehicle’s value to come from within the USMCA region.
This regional content rule has enabled manufacturers to avoid the 25% U.S. tariffs on steel and aluminum imports that affect other Mexican exports, making Nuevo León an attractive location for investment in auto parts. However, recent trends show some companies are opting for more discretion in announcing their investments, likely to avoid scrutiny due to the complex U.S. tariff environment and geopolitical issues.
Companies investing in Nuevo León often integrate regional supply chains to meet the USMCA’s rules of origin, ensuring auto parts and vehicles qualify for tariff-free access to the U.S. market, which remains the dominant destination for Mexico’s automobile exports.
One example of a company successfully adhering to USMCA measures is Kia Mexico, which uses around 98% regional content. Despite some companies' hesitance to publicize their investments, Nuevo León continues to attract FDI in the automotive sector. In fact, the state has recently received $2.7 billion in FDI in the first quarter of 2025, surpassing the total FDI for the whole of 2023 and 2024.
The state government has reported that the effects of nearshoring in Nuevo León are increasing, with each venture having greater added value and creating high-impact jobs. However, international trade tensions and pending USMCA reviews may continue to influence investment behaviors and operational strategies.
Emmanuel Loo, the deputy minister of investment and innovation at the state Economy Ministry, stated that many companies are waiting to make announcements due to the tariff issue. Despite this, companies are still building and hiring staff in Nuevo León, with three companies planning to hire 3,000 workers, according to the state government.
In conclusion, the USMCA’s tariff exemptions tied to compliance with regional content requirements have sustained and shaped FDI flows into Nuevo León’s auto parts sector, offsetting some negative impacts of tariffs on steel and aluminum. This encourages manufacturers to deepen North American supply chains, aligning production to meet USMCA rules of origin. However, ongoing trade tensions and USMCA reviews may continue to impact investment behaviors and operational strategies.
- The surge in foreign direct investment (FDI) in Nuevo León's auto parts sector, worth over $73 billion since 2021, can be partly attributed to the USMCA free trade agreement's tariff exemptions on steel and aluminum for companies that comply with strict rules of origin.
- Due to the USMCA’s regional content rule, manufacturers in Nuevo León integrate regional supply chains to ensure autoparts and vehicles qualify for tariff-free access to the U.S. market, making it an attractive location for investment in the automotive industry.
- Despite some companies' hesitance to publicize their investments, Nuevo León continues to attract FDI in the automotive sector, as seen by the $2.7 billion received in the first quarter of 2025, surpassing the total FDI for the whole of 2023 and 2024.
- Emmanuel Loo, the deputy minister of investment and innovation at the state Economy Ministry, stated that many companies are waiting to make announcements due to the tariff issue, yet companies are still building facilities and hiring staff in Nuevo León, with three companies planning to hire 3,000 workers.
- Ongoing international trade tensions and pending USMCA reviews may continue to influence investment behaviors and operational strategies in Nuevo León's auto parts sector, potentially impacting the growth and expansion of nearby businesses and finance within the industry and the economy as a whole, generating general-news headlines and political discussions.
