The Role of Special Economic Zones in Promoting Nearshoring in Central America

Special Economic Zones (SEZs) are designated areas within a country that operate under different economic regulations than the rest of the nation. These zones are designed to attract investment by offering benefits such as tax incentives, simplified customs procedures, and enhanced infrastructure.

As the United States has increased tariffs on Chinese imports, peaking at 145% in April 2025, many U.S. companies are reconsidering their reliance on China-based supply chains. This pressure has accelerated interest in nearshoring—relocating operations closer to the U.S. market. Central America has emerged as a strategic hub for companies seeking resilience, cost efficiency, and stability amid a shifting global trade landscape.

What Are Special Economic Zones?

Globally, SEZs have played a crucial role in economic development by creating investment-friendly environments. They typically offer:

• Tax incentives such as reduced or zero corporate taxes.

• Regulatory flexibility that streamlines labor and environmental regulations.

• Simplified customs processes to reduce import/export delays.

• Dedicated infrastructure including roads, energy, and communication networks.

These features make SEZs attractive for industrial relocation and long-term planning, especially for manufacturers looking to diversify their operations outside of Asia.

The Trump Tariffs on China: A Catalyst for Nearshoring

In 2025, the U.S. administration raised tariffs on Chinese goods in several stages: 10%, then 20%, and finally up to 145% on key imports. This move disrupted global supply chains and increased the cost of doing business with China. As a result, many companies adopted a "China + One" strategy—maintaining some operations in China while exploring alternative locations. The need for stable, geographically closer alternatives has never been greater.

SEZs in Central America: Landscape and Potential

Central America presents a diverse landscape of SEZ models, each tailored to attract foreign investment and stimulate economic growth. In Honduras, the government implemented ZEDEs (Zones for Employment and Economic Development), which operate with their own legal, administrative, and fiscal frameworks to promote innovation and international business activity. El Salvador and Nicaragua offer a combination of industrial parks and export processing zones, focusing on streamlined manufacturing and export-oriented operations supported by tax incentives and customs facilitation. Guatemala, meanwhile, operates Free Trade Zones (FTZs) under the ZOLIC law, a robust framework that supports infrastructure development, regulatory clarity, and fiscal benefits, making it one of the most structured and scalable SEZ systems in the region.

One of the most promising SEZs is Michatoya Pacífico in Guatemala, a 1,600-hectare development located 72 kilometers from Guatemala City near Puerto Quetzal. It features advanced infrastructure, including renewable energy systems and a planned private airport, and is designed with sustainability and workforce development at its core.

Strategic Benefits of Central American SEZs in a Tariff-Driven World

SEZs, such as Michatoya Pacífico, offer a suite of tangible advantages that make them ideal platforms for nearshoring. First, logistics and proximity to the U.S. market significantly reduce both shipping time and transportation costs compared to supply routes from Asia, enhancing supply chain agility. Second, SEZs provide extensive incentives and infrastructure, including turnkey industrial facilities, reliable utilities, and streamlined customs services, often underpinned by government-backed policies designed to attract investment. Finally, talent and training are built into the SEZ model, with vocational education programs and partnerships with local institutions ensuring a consistent pipeline of skilled labor tailored to the needs of global industries.

The recent U.S. tariffs imposed by the Trump administration, ranging from 10% to 19% on several countries in the CAFTA-DR, have effectively suspended key benefits of the agreement, introducing new costs and uncertainty for exporters. While Guatemala and others have criticized the move as a violation of CAFTA-DR's principles, the administration has justified the tariffs as necessary for protecting domestic industries. Looking ahead, the future of CAFTA-DR under Trump appears precarious, with potential renegotiations or further restrictions likely if trade imbalances remain a focal point of U.S. policy.

Case Study: Michatoya Pacífico and the Hansae Partnership

Hansae, a leading global apparel manufacturer, has partnered with Michatoya Pacífico and the United States Agency for International Development (USAID) to build a vertically integrated production facility. The company established a vertically integrated manufacturing complex, which enhanced operational efficiency and reduced lead times.  The strategic move also facilitated access to a skilled local workforce and leveraged the SEZ's advanced infrastructure, contributing to Hansae's sustainable growth in the region. This collaboration is a model for how SEZs can deliver economic, social, and environmental benefits while supporting business goals.

Policy and Investment Outlook

Although the current tariffs on China may fluctuate, the broader trend suggests that continued trade tensions are likely. Institutions like the Inter-American Development Bank and USAID are increasingly supporting nearshoring initiatives. SEZs like Michatoya are well-positioned to receive additional foreign direct investment and support for infrastructure development.

SEZs offer a critical advantage for companies reevaluating their global supply chains. Michatoya Pacífico exemplifies how Central America is rising to meet this moment.

For businesses seeking stability, efficiency, and proximity to the U.S. market, now is the time to explore SEZ opportunities in the region, before the competition gets there first.

ALD Strategic Advisory’s Perspective

At ALD, we help clients navigate the complexities of SEZ investment:

• Analyzing tariff risks and cost-benefit scenarios.

• Assisting with site selection and regulatory compliance.

• Facilitating engagement with local stakeholders.

We recommend nearshoring strategies that are resilient, scalable, and tailored to each client’s operational needs.