2025 Q1 Global Manufacturing: Sites Shifted, Power Didn't

2025 started with renewed uncertainty across global manufacturing. With tariffs rising, orders shifting, and production relocating, companies are scrambling to rebuild supply chains. China, Mexico, Vietnam, the U.S.—none offer a perfect answer. The question is no longer “where to make,” but “who can deliver under pressure.”

1. China Moves to Mexico to Dodge Tariffs

To avoid escalating tariffs from the Trump administration, Chinese manufacturers are rapidly expanding in Mexico. Over $1 billion was invested in northern Mexico in Q1, targeting EV parts, solar components, and electronics. Through USMCA, these goods can enter the U.S. tariff-free.

But U.S. lawmakers are pushing back. In March, some proposed restricting Chinese-owned Mexican factories from exporting to the U.S., especially in sensitive tech sectors. No formal policy yet, but the political risk is growing.

2. Vietnam Caught in the Crossfire

Vietnam is facing backlash as a transshipment hub. Some Chinese firms moved final assembly there, prompting the U.S. to impose up to 46% countervailing duties on Vietnamese goods. Electronics, textiles, and hardware are most affected. Orders are down, costs are up, and Vietnam’s reliance on the U.S. market is under pressure.

3. China’s Resilience Holds

Despite some outbound shifts, China’s manufacturing remains strong. In March, PMI rose to 50.5—an 11-month high. High-end and time-sensitive orders still prefer China, thanks to its supply chain depth, stable delivery, and engineering strength. Many buyers, after facing delays elsewhere, are returning.

4. U.S. Capacity Still Limited

“Made in America” remains more of a slogan than a system. Most U.S. investment focuses on semiconductors and batteries. Broader manufacturing still faces cost, labor, and integration hurdles. Apple’s iPhone assembly efforts in the U.S. remain slow and expensive.

5. No Full Replacement for China—Yet

Mexico and Vietnam play useful roles, but are not yet true substitutes. The U.S. lacks scale and systems. For now, China remains the only location that can handle speed, volume, and complexity at once. The real challenge ahead isn’t just choosing a factory—it’s building a network that can adapt.