The Trump administration has directed U.S. Trade Representative Jamieson Greer to pursue quotas, tariffs and stricter rules of origin during the upcoming review of the T-MEC (the U.S.-Mexico-Canada trade agreement that replaced NAFTA in 2020). The goal: shrink a record $197 billion goods trade deficit with Mexico recorded in 2025. No specific measures have been approved yet, but Baja California’s export-dependent factory sector sits squarely in the crosshairs.
Over 1,000 Baja Maquiladoras Depend on Duty-Free U.S. Access
Baja California is Mexico’s second-largest maquiladora state by employment. The region hosts more than 1,000 export assembly plants concentrated in Tijuana, Mexicali and Tecate. These factories employ roughly 300,000 workers and produce medical devices, aerospace components, auto parts and consumer electronics, with the vast majority shipped to U.S. buyers.
Three sectors face the greatest exposure. Medical devices represent Baja’s fastest-growing maquiladora segment. Tijuana alone accounts for an estimated 70 percent of Mexico’s medical device exports, with major operations from Becton Dickinson, Medtronic, DJO Global and others clustered in industrial parks like El Florido and Pacific Industrial Center. Stricter rules of origin could force these manufacturers to source more components from North American suppliers rather than Asian ones, raising production costs.
Auto parts rank as Baja’s largest maquiladora sector by volume. Plants in Mexicali and Tijuana produce wiring harnesses, brake systems and stamped metal components for U.S. automakers. The original T-MEC already raised regional value content requirements for autos from 62.5 percent to 75 percent. A further increase would squeeze suppliers already struggling to meet existing thresholds.
Electronics assembly, including television sets, computer peripherals and circuit boards, remains a staple of Tijuana’s industrial base. Samsung, Panasonic and Foxconn all operate plants in the city. Quotas capping the volume of finished electronics crossing duty-free would hit these operations directly.
Baja Factory Employment Already Dropped Before Review Announcement
The T-MEC review announcement lands at a fragile moment for Baja’s industrial economy. Earlier in 2026, the state lost an estimated 10,000 formal manufacturing jobs as global demand softened and several companies paused expansion plans. INDEX Zona Costa, the maquiladora industry association for coastal Baja California, reported in early 2026 that new factory investment commitments in the Tijuana-Rosarito corridor had slowed compared to the same period in 2025.
Trade uncertainty has compounded the problem. The Trump administration imposed a 25 percent tariff on most Mexican goods in March 2025 before partially rolling it back for T-MEC-compliant products. That episode cost Baja factories an estimated $2.3 billion in disrupted shipments over a two-month period, according to figures from CANACINTRA, Mexico’s national chamber of manufacturing industries. Companies that had begun shifting production from China to Baja, a trend known as nearshoring, slowed or froze those plans.
So while no new restrictions are in effect today, the pattern is clear. Each round of trade threats from Washington creates a planning freeze in Baja’s industrial parks. Lease negotiations stall, equipment orders pause and hiring slows even before any tariff takes effect.
Three Mechanisms Under Consideration Would Hit Differently
Greer outlined three possible tools at the Aspen Security Forum in mid-July 2026. Each would affect Baja factories in distinct ways.
Tariffs would raise the cost of importing Mexican-assembled goods into the United States. If set in the 5 to 15 percent range, tariffs would erode the labor-cost advantage that draws manufacturers to Baja. A Tijuana plant paying workers $4 to $6 per hour competes with U.S. plants paying $20 or more, but a 15 percent tariff on finished goods narrows that gap significantly.
Quotas would cap the volume of specific products allowed to cross the border at preferential rates. This approach would create winners and losers within sectors. Companies that fill their quota early in the year would ship freely, while competitors would face higher costs for the rest of the year.
Stricter rules of origin would require a higher percentage of a product’s components to be sourced from North America (the U.S., Mexico or Canada) to qualify for duty-free treatment. Products using Asian-sourced chips, plastics or raw materials would lose their preferential status. This mechanism would force factories to rebuild supplier networks, a process that can take 12 to 18 months.
The $197 billion deficit figure driving Washington’s push includes goods that contain significant U.S.-made components. American-made parts are shipped to Mexico, assembled into finished products and returned. The headline deficit number does not subtract the value of those U.S. inputs, a point Mexican officials have raised repeatedly.
Formal T-MEC review negotiations are scheduled to begin later in 2026, with final decisions expected in early 2027. Mexico has not issued a formal response to Greer’s remarks. Environmental groups have also pushed to include the Tijuana River pollution crisis in the review talks, adding complexity to an already tense process. The story was first reported by El Imparcial.