The dividing line between the Southwest U.S. and La Frontera is ripe for industry.
by Kelly Barraza
From Baja to Brownsville, the U.S.-Mexico border has proved to be a magnet for automotive, technology and other companies looking to grow their footprints. The nearly 2,000-mile-long region separating Mexico and the United States continues to capture the attention of corporate and industrial investment even as suspense lingers around the potential impact of steep American tariffs on the supply chain and cost of imports.
Site Selection spoke with stakeholders in Arizona, Monterrey and Mexicali about the state of the economy at the border and what should be considered when bringing business to either side of the national boundary.
Uncertainty Over Tariff Impacts
Following changes to American tariff policies enacted by the Trump Administration in early 2025, passenger vehicles, automotive parts and steel imports from Mexico are some of the products now facing a 25% ad valorem tax. The impact of these policy changes on critical products from Mexico, known for these manufacturing sectors, has already been felt by some companies.
Jonathan Keyser, managing partner of Keyser, an Arizona-based international, full-service commercial real estate brokerage firm, has seen the dynamics shift in the U.S. and Mexico following the arrival of the new tariffs.
“There is a ton of upheaval, and it’s interesting to see it play out. Some of it good, and some of it, I’d argue, not so good,” Keyser says. “Arizona is a border state, and we do a lot back and forth. We’ve had multiple projects. One example: We have a project where, because of the tariffs [in China], the company was looking to take workers out of Asia and move them nearshore to Mexico. Because of the tariffs [in Mexico], that project has been killed. In fact, that 10% to 20% minimum tariff killed the company’s business model, and they’re going into Chapter 11.”
Still, Keyser is seeing company projects that are racing to start operations in North America, with an eye on Mexico to set up shop. “We are working on a couple of active ones right now. They are moving from other geographies to set up operations in Mexico believing it will give them better access to the U.S. market,” Keyser says.
Mexico continues to be a critical nearshoring location, as seen in manufacturing projects like the recently completed A.O. Smith facility in Juarez and Missouri-based Emerson Electric’s new Chihuahua plant. North of the border, electronic equipment manufacturer Schneider Electric just broke ground on a facility expansion in El Paso, Texas — a $50 million project that is expected to bring another 300 jobs to its campus in the next few years.
Nuevo León Leverages Industry and Workforce
British-owned company Unilever recently announced a $407 million manufacturing project in Salinas Victoria, north of Monterrey in Nuevo Leon, which is part of $1.5 billion the multinational consumer goods company plans to invest in Mexico over the next four years. The Ministry of Economy of Nuevo León has worked closely with Unilever in the areas of site selection, incentives, infrastructure alignment, permitting and workforce development and will likely continue to foster this project, which will generate 1,500 new jobs in the state.
Photo: Getty Images
In an April 2025 visit to London, Nuevo León Governor Samuel García and Unilever executives jointly announced a new investment of $800 million by the company. Officials of the State Ministry said the facility will serve as a regional production and logistics hub, benefiting from Nuevo León’s strengths in industrial infrastructure, supply chain networks and access to North American markets via the Columbia-Laredo border crossing.
Between October 2021 and February 2024, Nuevo León confirmed 332 foreign direct investment (FDI) projects, totaling $73 billion and generating more than 285,000 new jobs, according to the State Ministry of Economy. This includes 165 new investments and 167 expansions.
“Talent development is a major strategic priority for us.”
— Miguel Olivares, Liaison Coordinator, Ministry of Economy of the State of Baja California
This FDI momentum is underpinned by Nuevo León’s status as the top contributor to Mexico’s national economic growth, responsible for 27.5% of the country’s economic activity increase in Q4 2024, according to Mexico’s National Institute of Statistics and Geography (INEGI).
Continued interest from foreign firms looking to develop in Nuevo León has solidified the state’s position as the leading hub for foreign investment along the U.S.-Mexico border, favored due its nearshoring potential, geopolitical realignment and supply chain resilience.
Changes in Mexican Government and Economic Strategy
In January 2025, Mexico President Claudia Sheinbaum announced her national economic development strategy “Plan Mexico” that has a portfolio of nearly $300 billion reserved for national and foreign investments aimed at boosting the Mexican economy and reducing poverty and inequities within the country. Goals of the plan include:
- Making Mexico the 10th largest global economy (currently 12th)
- Generating 1.5 million jobs
- Increasing Mexican manufacturing so that 50% of domestic supply and consumption is made in Mexico (with focus on textiles, footwear, furniture and toy sectors)
- Increasing Mexico’s share in global exports to 15%
- Cutting processing time for investments and new businesses in Mexico in half
- Increasing vaccine manufacturing.
Prodensa is a professional services firm started in 1985 that has assisted with the start-up and expansion of over 1,000 business projects across Mexico. Juan Carlos Posada, business development manager at Prodensa, spoke about the impact of the new Mexican administration on business in Mexico.
“We’re seeing a more structured channel for public-private dialogue through the commission established by President Sheinbaum,” Posada explains. “This has improved communication with her cabinet and created new opportunities to collaborate more closely with the federal government. From a business standpoint, it’s fostering a more coordinated environment for investment and trade discussions, particularly with U.S. counterparts.”
Sheinbaum has indicated her intent to not increase funding through raising taxes, but through a more efficient process of collecting tax dollars — a fiscal strategy she employed during her tenure as the mayor of Mexico City.
“At the same time, Mexico’s tax authority has been intensifying its audit efforts, especially within the maquiladora sector,” Posada adds. “This aligns with the new administration’s fiscal strategy to reduce the federal deficit, which reached 5.9% of GDP in 2024, without increasing tax rates. President Sheinbaum has stated her goal of narrowing the deficit to approximately 3% of GDP, which implies a greater emphasis on enforcement, compliance, and targeted audits to strengthen tax collection. As a result, companies operating in Mexico should expect stricter oversight and should reinforce their compliance practices accordingly.”
Miguel Olivares, liaison coordinator at the Ministry of Economy of the State of Baja California, notes that previous efforts at the federal level placed strong emphasis on development in southern Mexico, while the current administration is working to expand that focus and strengthen regional development strategies based on each state’s economic vocation.
“Under President Claudia Sheinbaum’s administration, we see a clear strategy to promote regional development based on industrial strengths,” Olivares says. “For example, Nuevo León leads in heavy industry and steel. Baja California, in contrast, offers strong capabilities in aerospace, advanced electronics, medical devices, semiconductors, electric vehicles and automotive components.”
Olivares also notes that workforce and talent development is thriving in the Baja region. Overall, the availability of skilled labor in Baja and in border cities is a big draw.
“Talent development is a major strategic priority for us. Rather than relying heavily on incentives, we focus on long-term competitiveness through workforce development and strong collaboration between academia, industry and government — the triple helix,” says Olivares.