Bosch will invest $2 billion in a semiconductor plant in California as part of a $7.5 billion plan in the United States through 2031; experts believe the annual review of the USMCA increases uncertainty for automotive investments in Mexico
The world's largest automotive supplier, Bosch, will allocate $2 billion to a semiconductor plant in the United States.
Paul Thomas, CEO of Bosch North America, told Reuters that the latest decisions regarding the United States-Mexico-Canada Agreement (USMCA) are among the reasons the company decided to increase its investments in the United States.
Bosch plans to invest up to $7.5 billion in its U.S. operations through 2031.
Janneth Quiroz, Director of Economic, Foreign Exchange, and Stock Market Analysis at Grupo Financiero Monex, asserted that the U.S. decision to replace the expectation of a long-term extension of the USMCA with a system of annual reviews alters companies' perception of risk, particularly in an industry like automotive, where investments are planned with horizons of 10, 15, or even 20 years.
“The main effect is not that companies will immediately abandon Mexico, but rather that uncertainty increases. When an automaker or a global supplier decides to build a new plant or expand capacity, it needs clarity on the trade rules that will prevail throughout the life of that investment. If the treaty's terms could change every year, the cost of doing business increases, and some companies choose to be more cautious,” she explained to this news outlet.
According to Rodolfo Ostolaza, Deputy Director of the Economic Studies Department at Banamex, the implementation of a U.S. tariff policy has triggered a relocation of production that is impacting the automotive sector, where value chains are being modified.
“There is uncertainty surrounding the USMCA because the treaty is not being followed as originally planned. Investors like certainty… in Mexico, investments in general are at a standstill.”
Janneth Quiroz stated that several factors are currently converging to favor the relocation of investments to the United States:
• The strong tax incentives and subsidies offered by the United States for manufacturing and strategic investments.
• Tariffs and industrial policy aimed at strengthening domestic production.
• The desire of many companies to manufacture as close as possible to the U.S. consumer.
• Trade uncertainty stemming from both the annual review of the USMCA and the possibility of new protectionist measures.
“In this context, decisions like those of Toyota and Bosch reflect a strategy of diversification and risk reduction.” “This doesn’t necessarily mean that Mexico has ceased to be competitive, but it does show that companies are adjusting their plans to become less dependent on a single country of production,” Quiroz explained.
Section 232 Tariffs
Ostolaza said that the automotive industry is currently impacted by Section 232 tariffs on steel and aluminum, on inputs used by the sector, and on auto parts.
“These tariffs bring the average tariff for Mexico to 3.4%,” explained the deputy director of Banamex.
He recalled that in February and March of 2015, the Donald Trump administration imposed 25% tariffs under the International Emergency Economic Powers Act (IEEPA) on Mexico and Canada, which had an impact because 80% of Mexican exports are destined for the United States. These tariffs are no longer in effect.
Subsequently, in April, the Liberation Day tariffs were imposed, which were later declared illegal by the Supreme Court.
This situation led Mexico to increase its regional content requirement from 48% to 75% in just one year, a requirement necessary to avoid tariffs.
“Many producers and exporters preferred to pay tariffs rather than incur administrative costs,” Ostolaza emphasized.
Context: Section 232 tariffs are levies imposed by the United States under the pretext of protecting national security. They currently include a 50% general tariff on steel, aluminum, and copper, as well as a 25% tariff on medium and heavy-duty trucks and their parts, and a 10% tariff on buses.
The Roseville plant
Bosch announced a definitive agreement with the Trump Administration to receive up to $225 million in direct financing from the Department of Commerce’s CHIPS Program Office to support Bosch’s $2 billion investment in transforming its Roseville, California, facility to produce silicon carbide (SiC) semiconductors.
The Roseville plant has over 40 years of experience in semiconductor manufacturing, but is currently undergoing a profound transformation to become a facility that produces and tests SiC semiconductors using state-of-the-art processes and equipment.
In 2026, the leading technology and services provider plans to create its first commercially produced chips on 200-millimeter wafers, based on Bosch's pioneering SiC technology.
Local Manufacturing in the US
"The start of sample production and our agreement with the Department of Commerce represent a milestone that will allow us to offer our local customers what they have requested: local manufacturing in the United States," said Paul Thomas, President and CEO of Bosch North America.
He added that producing silicon carbide chips in the United States helps support supply chain resilience and leverages the expertise of manufacturing partners in the country to bring this technology to the US market in a timely manner.
For his part, U.S. Commerce Secretary Howard Lutnick asserted that the Trump administration is committed to developing a secure supply chain in the United States, enabling continuous innovation and competitive leadership in industries of national and economic importance.
Relocating a Plant Is Difficult
According to experts, Mexico retains significant structural advantages: competitive labor costs, a broad network of suppliers, manufacturing experience, a privileged geographic location, and a productive integration with North America that has taken decades to build.
“These advantages don't disappear overnight, but they do need to be strengthened to avoid a gradual loss of investment,” said the Director of Economic, Foreign Exchange, and Stock Market Analysis at Grupo Financiero Monex.
Ostolaza added that relocating an assembly plant is difficult; in the Bajío region, the workforce is highly specialized, and there are competitive advantages.
Not Just Tax Incentives
In cases like those of Toyota and Bosch, Janneth Quiroz, Director of Economic, Exchange Rate, and Stock Market Analysis at Grupo Financiero Monex, explains that Mexico needs to respond with a comprehensive strategy, not just isolated tax incentives.
She stated that the first priority should be reducing internal uncertainty, since, if the international environment is more complex, the country must offer certainty in what it does control, such as regulatory stability, respect for the rule of law, security for investments, and clear rules for the private sector.
Secondly, she commented, it is essential to strengthen infrastructure.
“Many companies still consider Mexico a highly competitive platform, but they require availability of electricity, access to water, better roads, ports, railways, and more efficient border crossings. Without this infrastructure, the phenomenon of relocation or nearshoring loses momentum,” she said.
She emphasized that it is crucial to increase the domestic content of the automotive industry because, currently, a significant portion of the components are still imported.
“Developing Mexican suppliers would increase national added value, generate better-paying jobs, and make it more difficult for production chains to relocate entirely to another country,” he said.
Another key element is human capital development. The transition to electric vehicles, automation, artificial intelligence, and advanced manufacturing demands engineers, specialized technicians, and highly trained personnel.
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