With Donald Trump’s return to the White House, nearshoring is back. Considered the inverse of offshoring, nearshoring is a US strategy that encourages companies to relocate their supply chains and manufacturing operations closer to the United States, particularly to neighboring countries in Latin America. The main goals are reduced reliance on distant suppliers in Asia, strengthened regional trade ties, and enhanced supply-chain resilience.
Nearshoring aligns with broader US trade and security objectives under Trump, aiming to create more stable and interconnected economies in the Americas. Nearshoring proponents argue that it can provide many benefits:
- Geopolitics: By moving supply chains closer to US shores and fostering closer economic ties with neighboring countries, nearshoring counters China’s growing regional influence.
- Proximity: Relocating operations to nearby countries reduces shipping times, transportation costs, and risks associated with long-distance trade.
- Resilience: Closely related to proximity, this refers to reduced dependence on global supply chains vulnerable to disruptions like pandemics or geopolitical tensions, especially when they tend to arise in Asia.
- Economics: Nearshoring strengthens economic integration with Latin America, especially Central America, promoting job creation and economic growth in the region.
- Immigration: By fueling industrialization in Latin America, nearshoring creates more formal employment opportunities with access to social services.
The first Trump administration’s Latin America policy sowed the seeds of the nearshoring strategy, calling for more strategic investment in the region. In August 2020, Mauricio Claver-Carone—then special advisor to the president and now serving as Trump’s special envoy to Latin America—spoke on the first Trump administration’s “Growth in the Americas” initiative (América Crece).
“América Crece is the initiative of the frameworks we have taken for the financing of energy and infrastructure … We have overcome many of the barriers to investment and financing by private institutions in the United States and channeling private investments with the work of the DFC, the Development Finance Corporation” (author’s translation).
The Américas Crece project was widely seen as Trump’s response to China’s ambitious and well-funded Belt and Road Initiative (BRI). As the Guardian reported in 2020, China’s BRI strategy aims to establish maritime trade and infrastructure investment projects in strategically placed countries around the globe. At the time, 19 countries in the region had signed up to the BRI, and state-directed Chinese companies had secured major projects in the mining, energy, and transportation sectors.
Emphasizing the need to enlist the US private sector’s support for America Crece, Michael G. Kozak, then acting assistant secretary of the State Department’s Bureau of Western Hemisphere Affairs, explained in September 2020:
“America Crece is a significant part of the US government’s positive economic agenda for the hemisphere. Countries of the region face a critical infrastructure gap, which drags down economic growth. America Crece channels the resources and expertise of the US government to attract private-sector investment in energy, transportation, and telecommunications infrastructure across the region.”
Kozak specifically mentioned the importance of investing in Guatemala. Unfortunately, US foreign direct investment (FDI) to Guatemala declined 37 percent in the last five-year period ending in 2023 over the previous five-year period. Meanwhile, total FDI from other countries increased 68.5 percent in the same time period, according to data from the Central Bank of Guatemala.
The US decrease in FDI to Guatemala would be even greater if inflation were taken into account. In these periods, US FDI into Guatemala went from averaging 27 percent of the total to just under 15 percent. That is a recipe for loss of influence in Guatemala, a country essential to the new Trump strategy of prioritizing Central and South America in US foreign policy, writ large.
Nearshoring unites the main issues Trump campaigned on in 2024: immigration, national security, and combatting China’s growing economic strength.
The incoming administration has already started strong, suspending USAID programs to put them under review. As Ryan Berg from CSIS has pointed out, Trump’s incoming administration will handle its foreign policy under the principles of Latin America first, which the US has never done before. In his first month in office, Secretary of State Marco Rubio will visit Central America, including Guatemala.
Given this context, nearshoring should be one of the regional priorities for the United States, representing a win-win situation for the US and Latin America. The groundwork has already been laid. In 2023, Congressman Mark Green (R-TN) reintroduced the Western Hemisphere Nearshoring Act, issuing the following statement:
“In response to the economic challenge of China’s manufacturing dominance, one policy that has been gaining traction is nearshoring—relocating supply chains and business operations within a nearby region instead of halfway around the globe.”
Similarly, Representative María Elvira Salazar (R-FL) and Senator Bill Cassidy (R-LA) have co-sponsored the Americas Act initiative. In the words of Salazar:
“It’s past time we unleash the full economic potential of the United States and Latin America. The Americas Act is THE solution to grow our economy and bring stability to the hemisphere.… This bill will create world-class business opportunities and jobs in Miami, help our allies in Latin America, build resiliency for American supply chains, and combat China’s influence.”
Both of these initiatives can garner bilateral support under the present Trump administration. Both the Nearshoring Act and the Americas Act were co-sponsored by Democrats, in the House and the Senate.
Not since the 1980s has Central America played such a prominent role in the US global strategy. Central American countries now face a clear choice regarding their political and economic development paths: align with the Trump administration and its nearshoring emphasis or forgo tremendous growth opportunities.
