Closer but Not Steadier? Logistics Performance and Latin America's Share of US Import Reallocation after the Section 301 Tariffs

In the vast, invisible web of global trade, goods move from factories to shelves across oceans and borders every day. For decades, the United States relied heavily on China to supply a huge portion of the products it sells, from electronics to clothing. But in 2018 and 2019, the US government decided to make Chinese goods more expensive by adding extra taxes, known as tariffs, to them. The idea was to encourage American businesses to stop buying from China and start buying from elsewhere. A popular story emerged immediately after these taxes were announced: because Latin America sits right next to the United States, it would be the natural winner. The logic seemed simple. If you are close to a customer, you can deliver faster and cheaper, especially when the usual supplier is suddenly blocked by high costs. This idea, often called "nearshoring," suggested that the region would see a massive boom in sales as companies rushed to move their supply chains closer to home.

This expectation rested on two main beliefs. First, that being geographically close to the United States is a huge advantage when supply chains are under stress. Second, that the countries in Latin America with the best systems for moving goods—efficient ports, fast customs, and reliable trucks—would be the ones to capture the most business. It seemed like a straightforward race where proximity and logistics would decide the winners. However, a new study by researcher Alfredo Merlet at the University of Seville challenges this comforting narrative. By digging deep into millions of records of actual shipments, the research asks a hard question: did Latin America actually win the race to replace Chinese goods, or did the region miss the opportunity entirely?

To find the answer, Merlet did not rely on broad stories or general trends. Instead, he examined a massive, detailed dataset covering nearly ten years of trade, from 2015 to 2025. He looked at 4,772 specific types of products, ranging from tiny electronic components to heavy machinery, and tracked how much the United States imported from 74 different countries. Crucially, he matched this data with the original lists of which products were taxed and how much the tax increased. He also brought in a global ranking of how well each country handles logistics, a score that measures everything from the quality of roads to the speed of customs clearance. By using a statistical method that accounts for the unique strengths of every country and every product, he could isolate the exact effect of the taxes. This approach allowed him to see if the countries that were close to the US and had good logistics actually grew faster than everyone else in the specific products that were taxed.

The results were surprising and contrary to the popular story. The study confirmed that the taxes worked exactly as intended for China: imports of taxed products from China dropped by about half compared to other suppliers. But when the researcher looked at Latin America, the picture was different. Rather than capturing a large share of the business that left China, Latin American exporters actually lost ground. In the products that were hit by the taxes, imports from Latin America fell by about 27 percent relative to other non-Chinese suppliers. This was not a small error in the data; it was a clear pattern that held true whether looking at Mexico, Central America, or South America. Even Mexico, which has become the largest source of US imports in recent years, did not grow because of the tariffs. The study found that Mexico's sales increased in both taxed and untaxed products at a similar rate, meaning its growth was driven by broader economic integration and long-term investment, not by a sudden rush to replace Chinese goods.

The research also tested the second part of the nearshoring story: that better logistics would help a country win. The idea was that a country with a high logistics score would be better at handling the sudden shift in demand. The data showed no evidence for this. Within Latin America, countries with excellent logistics scores did not gain more business than those with poorer scores. In fact, the link between logistics performance and success was so weak that it could easily have happened by chance. The study found that a country's ability to capture new business depended less on how close it was to the US or how good its ports were, and more on what it was already making and who it was already connected to. The products that the US stopped buying from China were often complex manufactured goods that required specific supply chains. The countries that stepped in to fill the gap were mostly in Asia, where factories were already linked to Chinese suppliers and could switch production quickly. Latin American countries, despite being closer, often did not have the specific factories or supplier networks needed to make those exact goods.

This does not mean that Latin America is unimportant to the US or that logistics do not matter for trade in general. The study acknowledges that Mexico has grown significantly and is now the top source of US imports. However, the research clarifies that this growth was not a direct result of the 2018–2019 tariffs forcing companies to move. Instead, the shift in trade flows followed the path of least resistance. Companies did not simply move to the nearest country; they moved to the places where they could keep their existing relationships and supply chains intact. For Latin American nations, the lesson is that being close to a market is not enough on its own. To benefit from future shifts in global trade, countries need to build the specific industrial capabilities and supplier networks that match the products the world is actually buying. The study suggests that waiting for diverted demand to arrive simply because of geography is a strategy that may not work, as the real winners are often those who are already deeply embedded in the global production web, regardless of their distance from the final customer.