Tariffs on Mexico Test Nuevo Leon’s Industrial Momentum

Tariffs on steel and aluminium have cast a long shadow over the city of Nuevo Leon’s industrial economy, squeezing margins and freezing production cycles just as the region was positioning itself as Mexico’s darling of nearshoring. 

With US import duties jumping from 25 percent to 50 percent this year, the impact has been immediate: Mexican steel exports to the US dropped 29 percent in value in the first seven months, while aluminium exports fell 21 percent. 

Small workshops that once ran at full capacity have seen orders evaporate as clients paused operations or redirected supply chains in anticipation of tighter trade conditions, especially with US interest rate expectations shifting and the peso trading near 18.3 to the dollar.

Even as Mexico’s president secured a short extension on tariff pauses, uncertainty has continued to ripple through manufacturing. Nuevo Leon had banked heavily on high-profile foreign investments, including the Tesla Gigafactory announced in 2023, but the project stalled in mid-2024 amid concerns about policy stability and a cooling global trade environment. 

What Does This Mean for Me?

For small and mid-sized metalworking businesses that once benefited from double-digit industrial demand, the slowdown has forced them to pivot to local, low-volume orders simply to cover salaries.

With Mexico applying its own tariffs of up to 25 percent on steel imports from non-FTA countries such as China, companies caught between shifting US and Asian trade dynamics face a narrow path forward.