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Real Estate

The Still-Compelling Opportunity in U.S./Mexico Border Industrial Markets

March 2025 – 7 min read

Despite the looming headwinds that could impact global trade, there are still reasons for optimism on the outlook for U.S./Mexico trade—which suggests the opportunity in border port industrial markets remains attractive.

The combined value of goods traded between the U.S. and Mexico reached $794 billion in 2024 (Figure 1). This is nearly 2.5 times more than the value of aggregate goods traded between the two countries in 2002. And in 2019, Mexico surpassed both Canada and China in terms of goods imported, becoming the largest U.S. trade partner.

Figure 1: Aggregate Value of Goods Traded Through U.S./Mexico Land Ports

the-still-compelling-chart1.jpgSources: Bureau of Economic Analysis; Census Bureau. As of October 2024. Data for 2024 is annualized based upon figures through October 2024.

Even as protectionist rhetoric between the two nations has ramped up since the November 2024 elections, we believe Mexico’s status as the largest and most important trading partner to the U.S. is unlikely to change given the mutually beneficial relationship. With the return of President Donald Trump to the White House and his vociferous endorsement of tariffs to correct the perceived injustices created through global trade, investors and businesses are becoming increasingly concerned that the Administration will tip the scales toward self-inflicted and self-defeating economic wounds.

The concept of “reshoring” is an extension of this same logic. Reshoring, also known as on-shoring or near-shoring, references the (re)location of manufacturing and production activities to a firm’s country of domicile. Trump’s first presidency resulted in increased reshoring investment and activity that continues to the present. In practice, reshoring can take on different manifestations. As it concerns U.S. industry, currency, wages, power, and business costs make the prospect of fully repatriating manufacturing operations for domestic firms cost-prohibitive over the near term, while aging demographics create long-term headwinds. In many instances, firms have moved higher value-add segments of their supply chains back to the U.S. while keeping or moving other segments to foreign countries like Vietnam, Malaysia, China, Canada, and Mexico. Trump has explicitly targeted these half-measures.

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Dags Chen, CFA

Head of U.S. Real Estate Research & Strategy

Lincoln Janes, CFA

Director, Real Estate Research & Strategy

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any forecasts in this document are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Any investment results, portfolio compositions and/or examples set forth in this document are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this document. No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments.

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This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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