When people ask whether “nearshoring” has been paused, they often mean: Are companies abandoning or dramatically scaling down relocation of manufacturing from Asia (or elsewhere) into North America in response to tariffs or other deterrents? The answer is no, but the pace and form of that shift are evolving, and 2025 is shaping up to be the year where the optimism of 2022–2023 collides with harsher political realities.
Below I walk through some of the trade, investment, and policy data from 2025, especially for Mexico and Canada, to see whether the evidence supports the idea of a “pause.”
One of the clearest indicators is trade in goods between the U.S. and Mexico. Through the first seven months of 2025, U.S.–Mexico trade in goods totaled approximately US$506.91 billion, up ≈ 4.3 percent year over year.
Thus, even with tariffs and policy uncertainty, goods trade is growing, not shrinking. The growing import side suggests Mexico is continuing to supply intermediate and final goods into U.S. supply chains.
Monthly data confirm this. In July 2025, U.S. exports to Mexico were US$28,990.8 million, while imports from Mexico were US$45,366.0 million.
The import figure for that month (US$45,366 M) implies continued industrial flows from Mexico into the U.S.
The export number likewise remains strong, though less elevated.
The U.S. is still running a trade deficit with Mexico in goods, US$112,587.4 million (≈ US$112.6 billion) through July 2025. That deficit may partly reflect U.S. import dependence on Mexican components or finished goods, and it underscores that supply chains remain integrated despite tariff pressures.
Importantly, Mexico also became the top U.S. export destination in 2025 (for multiple months), a first in U.S. history. That is a strong signal of continued demand and reliance.
Takeaway: U.S.–Mexico goods trade remains vigorous in 2025. The volume of trade indicates that supply chains and manufacturing linkages are continuing, not being reversed wholesale.
Trade is the lifeblood, but to see whether nearshoring is being built out or retracted, we must look at capital flows, project announcements, and delays.
Canada is attracting a surge in foreign direct investment even in 2025. According to FDI Intelligence, 297 FDI announcements in the first half of 2025 put Canada on track to surpass its 2024 annual record. Many of these projects are in advanced manufacturing, clean tech, battery supply chains, and energy infrastructure.
The federal government is also stepping in to support industrial projects threatened by U.S. tariff pressure. For instance, a C$400 million aid package was announced in September 2025 to support Algoma Steel, a major Canadian steelmaker, facing export challenges. Meanwhile, a Strategic Response Fund (≈ CAD 5 billion) is being introduced to help firms adjust to tariff disruptions, shift suppliers, and invest in resilience. Canada’s “Buy Canadian” procurement policy is also being revived to cushion domestic demand.
However, not all projects are proceeding smoothly. A notable setback: Honda Canada postponed a CA$15 billion EV manufacturing and battery value chain investment in Ontario by ~two years, citing market cooling and uncertainty tied to U.S. trade policy. That suggests that while investment interest is alive, companies are more cautious about launching large-scale new capacity in the current environment.
Canada also continues to invest in niche advanced manufacturing: for example, in September 2025 the government announced C$40 million to expand Hitachi Energy Canada’s transformer manufacturing capacity and to build a new test lab in Varennes, Quebec. That kind of focused, high-value manufacturing is precisely the kind of nearshore specialization that complements U.S. supply chains.
While specific 2025 FDI numbers for Mexico are somewhat harder to pin down publicly, the trade growth itself suggests continued capacity use and industrial integration. Mexico’s status as the 2025 top U.S. trading partner and its import share growth imply that firms are still running (and possibly expanding) production there.
Moreover, the trade data reflect upward pressure: imports from Mexico to the U.S. are climbing faster than exports from the U.S. to Mexico, which is consistent with a manufacturing orientation focused on supplying U.S. markets.
We also see continued interest from industrial developers in Mexico. Though not every project is disclosed publicly in real time, regional industrial parks and nearshore supply chain hubs continue to promote new lots to foreign manufacturers, especially in northern and border states.
That said, constraints are growing more visible: Mexico’s infrastructure (power, water, permitting) is under strain, which may slow project scale-up or deter new mega-factory announcements in 2025. These constraints aren’t necessarily a cancellation of nearshoring, but they are a drag.
One of the key new factors in 2025 is the heightened tariff and regulatory risk, which both Canada and Mexico must navigate.
According to U.S. Customs and Border Protection, automobile and automobile parts tariffs under Section 232 became effective in April and May 2025, respectively.
Also, reciprocal duty/IEEPA measures applying to Mexico and Canada were enacted effective March 4, 2025.
Canada has responded with its own countermeasures and protective programs: expanding the Large Enterprise Tariff Loan (LETL) facility to cover more industries in July 2025.
The Canadian government has also enacted a new Strategic Response Fund, “Buy Canada” procurement mandates, and increased support for tariff-affected industries.
Amid tariff uncertainty, Canadian officials are aggressively marketing Canada’s low-carbon energy (especially hydroelectricity) and proximity to U.S. demand to maintain investor confidence.
In Mexico, repeated tariff threats make investors more cautious, potentially slowing the pace or scale of new investments, even if not deterring them entirely.
Because capital projects are long-dated, tariff risk has a disproportionate dampening effect: a plant with 10–15 year horizon must factor in the possibility of sudden duty changes. This is one reason why Canada’s Honda EV project was delayed, these risks are forcing timing adjustments, not wholesale cancellations.
Putting together the trade flows, investment signals, and policy pressures, here is where I land:
Trade volumes continue to grow, and capital flows (especially in Canada) remain strong. Many projects are currently in planning, engineering, or contingent phases, and new investments are still being announced (though with caution).
Mega factory announcements (especially in Mexico) are fewer and more scrutinized. Project timelines are being stretched. Cost sensitivity (energy, logistics, labor) and tariff/regulatory risk mean that firms are favoring modular expansion, brownfield upgrades, or incremental investments rather than huge greenfield bets.
Despite tariff threats, Canada has posted record FDI announcements and is doubling down on industrial policy tools to retain manufacturing investment. Its strengths, skilled workforce, clean energy, stable regulation, help cushion volatility.
Mexico is still supplying U.S. manufacturing at scale. But infrastructure stress (e.g. power/water), regulatory unpredictability, and rising costs are beginning to impose friction. These factors may slow expansion, but are unlikely to reverse the nearshoring trajectory entirely.
2025 is a transition year: decisions made now, regarding grid investment, permit reform, tariff posture—will determine whether nearshoring accelerates again or languishes in a half-realized state. If tariffs stabilize or recede, or if border / investment protections improve, we may see another wave of nearshore moves. But if policy volatility persists, many projects will remain on hold, delayed, or scaled back.
Supply chain resilience vs. cost optimization: Companies may trade off cost efficiencies to reduce policy risk by diversifying suppliers or duplicating capacity in multiple jurisdictions.
Stranded assets in Latin Asia: Some firms may hedge by keeping lean capacity in Asia while building buffer in North America—meaning Asia-based production may not fully exit.
Regional specialization intensifies: Canada may increasingly attract high-value, lower-emissions manufacturing (batteries, semiconductors, electrical equipment), while Mexico continues to handle mid-tier volume manufacturing.
Tariff escalation as a deterrent: If the U.S. imposes further tariffs or measures (e.g. extending auto part duties), firms will reevaluate location strategy more conservatively.
Competition from other nearshore zones: Countries in Latin America (e.g. Colombia, Brazil) could compete for supply chain projects, especially if they offer better incentives or lower tariff risk.
Nearshoring hasn’t stopped, it’s simply evolving under the weight of new tariffs, infrastructure constraints, and shifting capital flows across North America. For Chicago’s industrial market, these changes are already influencing site selection, leasing decisions, and long-term investment strategies. If you want to understand how tariffs and trade dynamics are shaping opportunities in Chicagoland, connect with our team of real estate experts at Van Vlissingen & Co. We’ll help you navigate where the risks end and the real opportunities begin.
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