CNN highlights interest from US companies to invest in the Dominican Republic due to its favorable economic climate

Free trade zones, competitive salaries, and proximity to the U.S.: the keys to the manufacturing boom.

Santo Domingo.- The investment climate, tax incentives, and geographical proximity to the United States are turning the Dominican Republic into the new "epicenter" of manufacturing relocation for U.S. companies seeking to escape the high tariffs imposed on Mexico and China, according to a recent report by the U.S. media outlet CNN.

The most recent case is that of “World Emblem”, the world's largest manufacturer of textile patches for clients such as Levi's, UPS, and the NHL, which will move between 30% and 35% of its production to Dominican soil. The decision came after the Donald Trump administration imposed in 2019 tariffs of 25% on Mexican products, where the company produced 65% of its articles.

"Fue un golpe duro. Los aranceles nos obligaron a buscar alternativas inmediatas", admitió Randy Carr, CEO de World Emblem, en entrevista con CNN. "En una semana ya estábamos en la República Dominicana. La combinación de zonas francas, costos competitivos y proximidad a EE.UU. era irresistible".

The company will build a 100,000-square-foot (9,290 m²) plant in the country, which will allow it to save millions of dollars annually thanks to the benefits of free trade zones, where companies operate with tax exemption on income, exports, and machinery.

According to UNCTAD (UN Conference on Trade and Development) data, the Dominican Republic captured 41% of all foreign direct investment (FDI) in Central America during 2023, with an annual growth of 7.1%. Manufacturing represents 20% of these flows, surpassed only by tourism.

Large multinationals such as Hanes, Timberland, Eaton Corporation, and Cardinal Health already manufacture in the DR. The aerospace and medical device sectors show particular dynamism.

The DR-CAFTA factor

The free trade agreement with the U.S. and Central America (in effect since 2004) has been key, according to experts. Although Trump temporarily applied 10% tariffs to the DR, today the U.S. maintains a record trade surplus of $5.4 billion with the country.

With the expansion of the port of Manzanillo (which will reduce maritime transit to the U.S. by one day) and new investments in renewable energy, the Dominican Republic is positioning itself as the most efficient alternative to Asian supply chains, which take 3-6 weeks to reach U.S. coasts.

World Emblem plans to begin operations in 2025. "We acted fast because the moment demanded it," Carr concluded. "DR wasn't our first option, but it definitely was the best."