Trends in nearshoring and regionalization
The following thesis studies the US supply chains in Mexico and China to determine whether there is evidence supporting trends in regionalization and nearshoring. Given the US-China political tensions that have escalated since the Trump presidency and the Covid-induced supply chain bottlenecks, a number of US firms have introduced the idea of relocating from China for resiliency, logistic, and national security purposes. In addition to analyzing commodity import data from the US Census to uncover industry-specific regionalization trends (or lack thereof), this thesis evaluates the political and economic factors driving regionalization and their implications for the development of the great power rivalry between the US and China. The first five chapters provide the definitions of key terms like regionalization and nearshoring; overviews of the modern historical, political, and economic relationships between the US, Mexico, and China; and an introduction to Vietnam and Southeast Asia to contextualize Mexico within the broader trend of relocation from China. The last five chapters include hypotheses, the results of my data analysis, data visualization, and interpretations of the results within their political economic context. The results indicate a negative relationship between US imports from Mexico and China in specific industries when China is taken as the dependent variable. The data support the claim that the industries most prone to regionalization are those dependent on labor-cost arbitrage, such as apparel and furniture, and to a lesser extent, some industries relevant to national security like medical devices and aircraft. Such trends indicate that economic factors take precedence over political factors in firms' decisions to regionalize or relocate from China.