The solid relationship between the U.S. and Mexico allows many cross-border companies to benefit from well-maintained trade routes, reduced tariffs for certain goods under the USMCA, and digitized processes that streamline inspections. However, there are still obstacles for businesses looking to expand operations. Customs delays, changing standards of compliance, and communication difficulties with suppliers are only a few of the problems encountered at the border every day.
How can companies successfully leverage the U.S.-Mexico trade relationship to overcome these challenges? The following organizations can serve as an example of best practices for cross-border businesses:
The car manufacturer is so involved in cross-border business that it has recently purchased a private lane at a border crossing in the state of Nuevo León. There are currently six businesses in Mexico that provide parts for Tesla’s vehicles, allowing the company to benefit from lower production costs, as well as reduced tariffs on Mexican-made vehicles and auto parts. This makes it easier for Tesla to increase productivity and profit margins, so much so that it is considering Mexico as a potential site for its new “Gigafactory”.
A leading provider of e-commerce and technology solutions, ShipMonk has warehouses across the U.S., and recently expanded operations to Tecate, Baja California, a Mexican border town. This business has thrived by complying with Section 321, a U.S. Customs and Border Patrol (CBP) legislation that allows duty-free entry to items valued at less than $800 U.S. dollars. This greatly reduces shipping costs and minimizes delivery waiting times. ShipMonk also holds a “Man on the Ground” mindset and believes that having a physical presence in strategic locations is the best way to reach customers quickly and effectively.
An unconventional addition to this list, Tech HUB is a binational incubator that offers employee certifications and startup consultancy in the U.S. and Mexico. Much of this company’s success is dependent on the business activity between both countries. The USMCA has also made cross-border work attractive for many, as it has strengthened labor laws and worker rights with legislations such as the Rapid Response Labor Mechanism. By leveraging these elements, Tech HUB has been able to fulfill new market demands in the current cross-border climate.
These companies have shown that cross-border activities are filled with opportunities for business growth. By strategically expanding their markets and supply lines to the U.S. and Mexico, they continue to innovate and reap the benefits of this long-standing alliance.
At Nepanoa, we can help you follow in their footsteps. Our team of experts is prepared to accompany your business and find the best strategy to succeed across borders.
Read more: Relocating Business Functions to Mexico