Twinshoring: The Emerging Evolution of Nearshoring and Its Disruptive Potential

As companies reevaluate global supply chains under rising geopolitical tensions, tariff volatility, and sustainability mandates, a significant but underrecognized shift is evolving beyond nearshoring: twinshoring. This involves simultaneously leveraging production in two proximate countries—for North America, particularly Mexico and the United States—as a strategic dual-source approach. This development may reshape supply chain resilience, industrial investment, and regulatory landscapes over the next decade, affecting multiple industries from manufacturing to pharmaceuticals.

Introduction

Twinshoring, an emerging supply chain strategy where companies split production between two nearshored countries, builds on the established trend of moving operations closer to end markets. This shift offers a novel dimension to supply chain design by mitigating risks linked to single-country concentration amid global uncertainties. Recent developments in trade activity, industrial investment, regulatory policies, and geopolitical pressures signal twinshoring’s growing momentum, especially in the North American context. This article explores the weak signal of twinshoring, outlines the multifaceted changes driving it, and analyzes its broader implications.

What’s Changing?

Nearshoring traditionally refers to relocating manufacturing closer to a firm’s home country to reduce transportation costs, improve responsiveness, and minimize some international trade risks. Mexico has been central to this trend for companies in the United States. However, [recent data](https://mexicobusiness.news/logistics/news/10-logistics-trends-2026) indicates a progression toward “twinshoring,” where firms maintain substantial production footprints in both Mexico and the U.S., rather than concentrating fully on one. This twin-source model seeks to balance proximity benefits with diversified operational risk.

Several forces underpin this shift:

• Industrial construction growth: Industrial construction linked to nearshoring is projected to grow at an average annual rate of 2.6% as firms expand facilities near the US border and domestically ([azobuild.com](https://www.azobuild.com/article.aspx?ArticleID=8776)). Significant investments, like Genentech’s $2 billion expansion of a biomanufacturing plant in the U.S., highlight increasing domestic production commitments ([finance.yahoo.com](https://finance.yahoo.com/news/roches-genentech-expands-investment-north-164100685.html)).
• Supply chain resilience imperatives: Approximately 66% of surveyed companies plan to restructure supply chains through onshoring, nearshoring, and supplier diversification if input costs increase in 2026 ([sdcexec.com](https://www.sdcexec.com/warehousing/retail/news/22958129/deloitte-llp-5-trends-set-to-reshape-retail-industry-in-2026)). Shared production between Mexico and the U.S. offers redundancy to absorb upstream shocks.
• Regulatory and geopolitical pressures: While Mexico benefits from tariff exemptions and moderate trade fragmentation risk ([vaneck.com](https://www.vaneck.com/us/en/blogs/emerging-markets-bonds/em-momentum-dm-fatigue-2025-imf-fall-takeaways/)), excessive regulations could erode its nearshoring competitiveness compared to alternatives ([jdsupra.com](https://www.jdsupra.com/legalnews/hot-topics-in-international-trade-7551480/)). Concurrently, the U.S. government is cutting domestic facility regulatory hurdles to incentivize reshoring ([group.atradius.com](https://group.atradius.com/knowledge-and-research/reports/industry-trends-pharmaceuticals-january-2026)). Twinshoring allows firms to pivot quickly between jurisdictions depending on shifting trade policies.
• Carbon and environmental standards: The EU’s Carbon Border Adjustment Mechanism (CBAM) encourages production closer to markets or under stricter decarbonization regimes ([pcbaassembly.com](https://pcbaassembly.com/blogs/news/circuit-boards-assembly-in-2026-current-capabilities-future-outlook)). Distributing production across two neighbors may help firms better navigate emissions compliance and carbon costs.
• Executive-level supply chain leadership shifts: Chief Procurement Officers (CPOs) are expected to take on more responsibility for AI-driven supply chain resilience and strategic diversification, potentially accelerating twinshoring decisions ([itsupplychain.com](https://itsupplychain.com/procurement-trends-for-2026-four-major-strategic-imperatives/)).

The combined effect is a nuanced approach moving from a single nearshored location to paired facilities across contiguous countries. This evolution remains underreported, overshadowed by broader narratives about simply “moving near.” Yet it could recalibrate trade ties, investment flows, and industrial policy priorities.

Why is this Important?

Twinshoring may significantly alter the strategic calculus for business leaders and policymakers. By balancing industrial activity between two proximate countries rather than concentrating in one, firms gain enhanced agility to respond to disruptions including:

• Geopolitical risk: Diversifying sources can mitigate upheaval from tariffs, border closures, or diplomatic conflicts.
• Input cost volatility: Different wage, energy, and material cost trends in Mexico and the U.S. provide flexible cost management opportunities.
• Regulatory variability: Flexibility to expand or shift production in response to tightening or loosening regulations across jurisdictions reduces compliance risk.
• Environmental policy compliance: With rising carbon pricing and border taxes, spreading production between countries with varying sustainability regulations may optimize emissions impact.

Industries beyond typical manufacturing stand to be disrupted. For example, biopharmaceutical firms investing heavily in domestic manufacturing are integrating twinshoring into long-term supply chain designs, combining scale and resilience. The growing role of AI in procurement means that data-driven decisions could increasingly favor multi-node supply chains to optimize risk and performance simultaneously.

Governments will also face novel policy challenges. Balancing incentives between domestic industrial growth and cross-border cooperation may become contentious as twinshoring intensifies. Trade agreement negotiations might include provisions encouraging—or managing—dual-sourced production models. Overlooked regulatory friction points could impede the efficiency twinshoring promises.

Implications

The rise of twinshoring suggests several actionable insights for business, research, and government actors:

• Strategic supply chain design must incorporate dual-location resilience: Firms should evaluate how splitting operations between neighboring countries improves risk mitigation and cost dynamics. This may require revisiting existing supplier networks and capital investments to create interconnected capabilities.
• Investments in infrastructure and technology integration intensify: Coordinated logistics, real-time supply chain visibility, and AI-powered procurement platforms will underpin effective twinshoring. Investment in data sharing and collaborative ecosystems between countries could expand.
• Regulatory harmonization efforts become crucial: Disparate regulatory frameworks that increase compliance overhead or create bottlenecks risk undermining twinshoring benefits. Policymakers might need to prioritize cross-border trade facilitation and streamlined approval processes to sustain momentum.
• New metrics of supply chain performance emerge: Beyond cost and speed, systems must now measure and optimize resilience, carbon footprint, and regulatory agility across binational operations.
• Business continuity planning grows in complexity: Twinshoring introduces more variables requiring scenario planning from geopolitical shifts to environmental policy changes. Proactive scenario planning addressing “what if” cases with dual-sourced production may become standard practice.

Failing to recognize twinshoring’s momentum could leave organizations and governments unprepared for shifting competitive dynamics and regulatory environments. Early adopters who develop integrated strategies across borders may capture significant advantages in supply chain resilience, market access, and sustainability compliance.

Questions

• How can enterprises redesign supply chains to capitalize on twinshoring without introducing excessive complexity or cost?
• What mechanisms can governments implement to reduce regulatory frictions that hinder cross-border industrial integration?
• Which technologies are most critical to enable seamless coordination and visibility across twinshored operations?
• How might emerging carbon border adjustments and sustainability mandates shift the cost-benefit analysis of twinshoring strategies?
• In what ways can cross-border labor markets and industrial policies be harmonized to foster the growth of twinshoring?
• What risks remain unaddressed by twinshoring that require further innovation or policy intervention?

Keywords

twinshoring; nearshoring; supply chain resilience; geopolitical risk; Carbon Border Adjustment Mechanism; industrial construction; procurement AI; supply chain diversification

Bibliography

• Nearshoring has now evolved into twinshoring, where Mexico's trade activity will continue to be heavily concentrated with the United States
• Industrial construction tied to nearshoring is projected to grow at an average annual rate of 2.6%
• Excessive regulation could reduce Mexico's attractiveness compared to other countries competing for nearshoring investments
• The urgency for transformation is underscored by 66% of respondents planning supply chain restructuring
• Geopolitical risk, tariff volatility, CBAM, and customer China +1 / nearshoring strategies continue to reshape production footprints
• CPOs to have growing responsibility for supply chain resilience, AI adoption, and long-term business performance
• Genentech doubles investment in biomanufacturing facility, underscoring U.S.-based manufacturing focus
• Trump administration decreases regulatory hurdles to incentivise reshoring
• Chile’s exports exempt from tariffs, reducing direct risks amid trade fragmentation