In a direct response to a pandemic-related rise in regionalization and supply chain disruptions, China is setting up shop in Mexico. Their new North American base for manufacturing is going to have a significant impact on everything from regional trade to supply chain timing to infrastructure development. Here are four things to look for as these manufacturing facilities become operational in the region:

Shorter Supply Chain

One of the major reasons for China to set up manufacturing sites in Mexico is to be closer to their largest consumer: the United States. Because they’ll be manufacturing and shipping goods from Mexico to US markets, there will be less need for cargo ships and, therefore, a shorter supply chain. This means shorter wait times for goods, lower shipping costs, and fewer shortages and disruptions due to the simplified supply chain.

Increased OTR Transportation, Infrastructure Projects

The freight forwarding industry will see a drop in demand, but OTR (over the road) transportation will increase between Mexico and the United States. As a result, infrastructure projects will need to increase in those border areas, as roadways, bridges, and other transportation-related infrastructure will see an increase in use. Look for an increase in infrastructure investments along the trade routes into and out of Mexico.

Free Trade Agreement Benefits

Because these Chinese firms will be manufacturing their products in Mexico, they will fall under the North American Free Trade Agreement (NAFTA), bypassing tariffs and reducing barriers to trade. This could translate to more affordable products and easier access in both US and Canadian markets.

US Economic Stimulation

Setting up manufacturing facilities is a direct investment in Mexico’s economy, of course, but the increase in regional trade will also stimulate the US economy. Manufacturing and shipping facilities often rely on US-made machinery or goods to operate, which means increased demand for US-based manufacturers. This exchange is a win-win for Mexico and the United States, and for the Chinese investors in the region.

These insights are just a snapshot into what is to come. As the pandemic taught us, supply chain disruptions are often difficult to predict, and their ripple effects are wide-reaching. The most important thing to keep in mind as the industry continues to change, grow, and react to global stimuli is this: everything changes. The supply chain of tomorrow will look different from today’s, and our businesses and governments need to be forward-thinking and prepare to adapt to any number of changes that arise.