Glossary for buying from Mexico

Short, practical definitions of the terms you meet when you source parts in Mexico: trade rules, logistics, quality and purchasing.

Nearshoring and manufacturing in Mexico

Nearshoring: Nearshoring means moving production or purchasing to a country close to the end market. For US companies this usually means Mexico instead of Asia.
Maquiladora: A maquiladora is a factory in Mexico that imports materials duty-free, manufactures or assembles them and exports the result, today usually under the IMMEX program.
Shelter company: A shelter company is a Mexican legal entity that lets a foreign manufacturer produce in Mexico under the shelter's own IMMEX program, permits and payroll.
Bajío region: The Bajío is an industrial region in central Mexico, usually taken to include Guanajuato, Querétaro, Aguascalientes and parts of Jalisco and San Luis Potosí.

IMMEX program: IMMEX is a Mexican government program that lets manufacturers import materials, parts and machinery temporarily without paying import duties, as long as the finished goods are exported.
USMCA (T-MEC): USMCA is the trade agreement between the United States, Mexico and Canada that replaced NAFTA on 1 July 2020. In Mexico it is called T-MEC.
Rules of origin: Rules of origin decide whether a product counts as made in a trade-agreement country and therefore qualifies for lower tariffs.
Pedimento: A pedimento is the Mexican customs declaration filed for every import and export, showing the goods, their tariff classification, value, duties and the customs program used.
Customs broker (agente aduanal): A customs broker is a licensed professional who prepares and files customs declarations. In Mexico most imports and exports must go through a licensed agente aduanal.

Incoterms: Incoterms are standard trade terms published by the International Chamber of Commerce that define who pays for and bears the risk of each part of a shipment.
Cross-border trucking and transfer (drayage): Most US–Mexico freight moves by truck, and at the border a short-haul transfer carrier often pulls the trailer across the bridge between Mexican and US yards.
Carta Porte: Carta Porte is a mandatory complement to the Mexican electronic invoice (CFDI) that documents goods transported inside Mexico: what, from where, to where and by which vehicle.

PPAP (Production Part Approval Process): PPAP is the automotive industry's standard process, defined by AIAG, for proving that a supplier's production process consistently makes parts that meet all requirements.
First article inspection (FAI): A first article inspection is a complete check of the first part from a new production setup against every requirement on the drawing.
IATF 16949: IATF 16949 is the quality management standard for automotive production and service parts suppliers, built on ISO 9001 and published by the International Automotive Task Force.
ISO 9001: ISO 9001 is the international standard for a quality management system. Certification shows that a company has documented processes for meeting customer requirements and improving them.

Landed cost: Landed cost is the full cost of a part delivered to your door: unit price plus freight, insurance, duties, customs brokerage, fees and handling.
RFQ (Request for Quotation): An RFQ is a request to suppliers to quote a price and terms for a defined part or service.
MOQ (Minimum Order Quantity): MOQ is the smallest quantity a supplier will produce or sell in one order.
Dual sourcing: Dual sourcing means buying the same part from two qualified suppliers so that a problem at one does not stop your production.

General information, not legal or customs advice. Rules and tariffs change; confirm details for your product with your customs broker.