Nearshore News: U.S.-China Tariffs, India’s Response, and Unilever’s bet on Mexico

The global trade landscape continues to shift under the weight of temporary relief, rising tensions, and bold bets. A 90-day U.S.-China tariff pause offers momentary breathing room for brands, slashing duties on goods and small packages, but uncertainty looms beyond August. The pause is also pressuring “China-plus-one” countries like Vietnam to secure better trade terms, while India signals its first formal retaliation. Meanwhile, Unilever’s $1.5B investment in Mexico underscores a longer-term realignment toward nearshoring.

Nearshore News Summary

• The U.S.-China trade truce brings temporary relief to brands (Vogue Business)
• The 90-day pause in U.S.-China tariffs puts pressure on other countries to negotiate better trade deals with the US (Reuters)
• As part of the U.S.-China trade truce, tariffs on low-value packages from China and Hong Kong have dropped from 120% to 54% (or a $100 flat fee) starting May 14 (NYT)
• India considers counter duties on US products (Bloomberg)
• Unilever will invest US$1.5 billion in Mexico from 2025 to 2028 to expand its beauty and personal care operations (Personal Care Insights)

The US-China trade agreement brings relief and whiplash for brands

Published: May 12, 2025
Source: Vogue Business

The U.S.-China trade truce brings temporary relief for fashion brands. The 90-day pause reduces tariffs from 145% to 30% on Chinese goods and from 125% to 10% on U.S. exports, buying time but not solving long-term challenges. While some brands welcome the breather, many remain cautious, still planning to shift production or absorb costs as they brace for future volatility.

Key points:

• Tariff Pause: Both countries reduced tariffs for 90 days (U.S.: 145% → 30%; China: 125% → 10%), effective through August 10.
• Brand Reaction: Relief is mixed with frustration; uncertainty persists, prompting some brands to continue shifting production away from China.
• Inventory & Pricing Risks: Smaller brands may over-order to beat the deadline, risking inventory gluts. Others are covering increased costs or pausing U.S. sales altogether.
• Residual Costs: A 30% tariff still impacts pricing and may lead to expensive back-to-school and holiday seasons for consumers.
• Need for Stability: Industry leaders call for long-term trade clarity to support predictable sourcing and investment decisions.

US tariff pause on Beijing puts pressure on ‘China-plus-one’ countries

Published: May 13, 2025
Source: Reuters

The 90-day pause in U.S.-China tariffs is reshaping the competitive landscape for countries like Vietnam, Mexico, and Thailand. These nations had previously benefited from multinationals shifting production away from China due to high U.S. tariffs. Now, with China’s costs temporarily lowered, countries such as Vietnam and Mexico are under pressure to negotiate better deals with the U.S. to retain their competitive edge and attract continued foreign investment.

Key points:

• Comparative Advantage Shift: Countries like Vietnam (previously 46% tariff), Thailand (36%), and Malaysia (24%) had been benefiting from companies seeking alternatives to China, but this advantage may now diminish.
• Investment Uncertainty: The pause creates unpredictability, leading companies to delay supply chain investments until future U.S. policy is clearer.
• Ongoing Negotiations: Southeast Asian countries and Mexico are pushing to secure better trade terms with the U.S. to maintain their appeal as manufacturing hubs.
• Vietnam & Mexico’s Position: Vietnam is seeking a better bilateral deal, while Mexico continues to highlight its tariff-free access under the USMCA as a selling point.
• Corporate Strategy Impact: Retailers and manufacturers like Walmart and Target are expected to continue diversifying suppliers, despite the tariff reprieve.

India Proposes First Counter Move Against Trump’s Tariff Regime

Published: May 13, 2025
Source: Bloomberg

India has proposed its first countermeasure against President Trump’s tariff regime by notifying the World Trade Organization of potential retaliatory duties on U.S. goods. This marks a shift from its earlier restraint as trade talks continue.

Key points:

• India’s first retaliation under Trump’s second term: India formally informed the WTO it would consider suspending trade concessions and applying tariffs on U.S. goods in response to the 25% levies imposed by the Trump administration on steel and aluminum imports.
• $7.6 billion in Indian exports impacted: India stated that U.S. tariffs affect $7.6 billion worth of its exports, potentially costing Indian exporters $1.91 billion in duties, prompting the country to seek an equivalent response in line with WTO rules.
• Retaliation could complicate trade negotiations: The move introduces tension into ongoing bilateral trade talks, with both nations aiming to finalize a deal by fall. Experts warn that the action could cast a shadow over progress, despite earlier cooperation.
• India shifts from conciliatory to assertive: While India had previously lowered tariffs on U.S. goods like bourbon and Harley-Davidson motorcycles, this WTO filing signals a more assertive posture, reflecting a broader shift in defending its economic interests.
• Trade friction amid geopolitical tensions: The retaliation coincided with Trump’s suggestion that U.S.-India trade was used as leverage in a ceasefire with Pakistan, a claim New Delhi firmly denied, emphasizing that trade was not discussed in those talks.

What to Know About Trump’s Latest Changes to Taxes on Small Packages From China

Published: May 14, 2025
Source: New York Times

As part of the temporary trade truce between the U.S. and China, tariffs on low-value packages from China and Hong Kong have dropped from 120% to 54% starting May 14. The reduced rate follows the May 2 imposition of a 120% tariff on shipments under $800, a dramatic shift from the previous de minimis exemption that allowed them to enter duty-free.

Key points:

• Tariffs on small packages slashed from 120% to 54%: After initially imposing a 120% tariff on May 2, the U.S. has lowered the rate to 54% as part of a 90-day tariff pause agreed upon with China. 
• End of the de minimis era: For years, the de minimis exemption allowed goods under $800 to enter the U.S. without duties. That loophole was closed on May 2, leading to a sudden spike in shipping costs for Chinese goods.
• Cost options for carriers: Carriers can now choose to apply either the 54% tariff or a $100 flat fee per package. Their choice must be applied consistently across all shipments for a month, which affects how costs are passed on to consumers.
• Ripple effects on Chinese manufacturing: In regions like Guangzhou, China’s apparel hub, factories are seeing reduced orders and growing uncertainty. Some have shut down or relocated to other countries like Vietnam to escape high U.S. tariffs.
• Economic stakes remain high: Despite the tariff cut, China’s export-driven economy faces continued strain. April saw a sharp drop in export orders, and businesses warn the ongoing trade war still threatens long-term sustainability.

Unilever bets on Mexico’s personal care market with US$1.5B investment

Published: May 13, 2025
Source: Personal Care Insights

Unilever will invest US$1.5 billion in Mexico from 2025 to 2028 to expand its beauty and personal care operations, including building a major new facility in Nuevo León. The investment supports Mexico’s “Plan México” and aims to make the country a regional export hub while boosting job creation, innovation, and sustainability.

Key points:

• Major Investment & New Facility: Unilever is committing US$1.5 billion to expand its beauty and personal care footprint in Mexico, with a flagship US$408.5 million factory in Nuevo León for brands like Dove, Rexona, and Sedal. The remainder will go toward enhancing existing sites in the State of Mexico and Morelos.
• Strategic Role in Regional Trade: The new plant will serve as an export hub for the North American market, benefiting from Mexico’s proximity to the U.S. and the framework of the US–Mexico–Canada Agreement. This helps Unilever mitigate global supply chain risks through nearshoring.
• Job Creation & Economic Impact: Mexico’s Ministry of Economy estimates the investment will create 1,200 new jobs, adding to Unilever’s current workforce of over 7,000 in the country.
• Sustainability & Digitalization Goals: The factory aims to operate on 30% renewable energy by 2026 and pursue Lighthouse certification for technological advancement.
• Industry Momentum in Latin America: Unilever’s investment reflects growing interest in Latin America’s personal care sector, expected to grow at a CAGR of 5.8% from 2024–2030. The region’s unique cultural and economic dynamics offer strong potential for tailored, localized growth strategies.