Nearshoring to the Dominican Republic: Why Middle East and European Companies Are Restructuring Their US Supply Chains

A structural shift is underway in how Middle Eastern and European companies approach the United States market. Driven by tariff volatility, supply chain fragility exposed during 2020-2022, and increased scrutiny of foreign-sourced inputs in US government and hospital procurement, companies across Israel, the UAE, Germany, and broader Europe are restructuring their US supply chains around nearshore manufacturing anchors in the Caribbean Basin.

The Dominican Republic has emerged as the preferred anchor for this restructuring – particularly for companies in medical devices, light manufacturing, and technology-adjacent assembly. This article examines why, and what the execution pathway looks like.

What Is Nearshoring and Why Does It Matter Now?

Nearshoring refers to relocating or establishing manufacturing or assembly operations in a country geographically proximate to the destination market, rather than in distant low-cost centers such as China or Southeast Asia. For US-bound goods, nearshoring typically means establishing operations in Mexico, Central America, or the Caribbean.

The strategic case for nearshoring has accelerated since 2018. US-China tariff escalation under Section 301 added 7.5-25% duties on broad categories of Chinese goods. The COVID-19 pandemic exposed the fragility of extended supply chains. The CHIPS Act, the Inflation Reduction Act, and evolving Buy American provisions in US federal procurement have increased the importance of qualifying origin and domestic content rules. Companies that built their US market strategies around Chinese or distant Asian manufacturing are now facing cost and compliance pressure that nearshoring directly addresses.

Why the Dominican Republic, Not Mexico?

Mexico is the dominant nearshoring destination for US-bound manufacturing – it has scale, a mature maquiladora system under USMCA, and deep existing supply chain integration with the US. But Mexico is not the right answer for every company or every situation.

The Dominican Republic offers a distinct value proposition for specific company profiles. Free zone incentives under Law 8-90 are more comprehensive than comparable Mexican maquiladora benefits – particularly on capital repatriation and income tax. CAFTA-DR provides equivalent preferential US market access to USMCA for qualifying goods. And the DR presents a lower sovereign risk profile and lower operational cost base than many Mexican manufacturing states for smaller to mid-scale operations.

For Israeli and European companies – particularly those in medical devices, defense-adjacent supply chain, and technology – the DR also offers a geopolitical neutrality that matters in current US procurement environments. Companies with Israeli or UAE supply chain origins face heightened scrutiny in certain US agency procurement contexts; a qualifying DR manufacturing operation under CAFTA-DR can address that scrutiny by establishing clear US market-access origin.

The Medical Device Precedent

The clearest evidence that the DR nearshoring model works for Middle Eastern and European companies is in medical devices. The Dominican Republic is now one of the top global exporters of medical devices to the United States, with a device export base that grew from approximately $800 million in 2015 to over $2 billion annually by 2023. Companies from the US, Europe, and increasingly Israel have established device manufacturing and assembly operations in Dominican free zones specifically to access US hospital procurement channels under CAFTA-DR qualifying origin.

What the Restructuring Process Looks Like

A Middle Eastern or European company restructuring its US supply chain through the Dominican Republic typically goes through five phases: corridor feasibility, jurisdiction and park selection, legal and regulatory setup, capital structuring, and US market entry. Done correctly, a company can move from initial corridor feasibility to operational DR manufacturing in 6-12 months.

The Advisory Gap

The primary reason companies fail or significantly delay corridor execution is advisory fragmentation. They engage a Dominican attorney for the legal setup, a logistics firm for the supply chain, an accounting firm for the tax structure, and a US-side consultant for market access – none of whom communicate with each other or understand the full cross-border picture.

Effective corridor execution requires an advisor who holds the full transaction – from origin through anchor to destination – and who has direct institutional relationships in all three jurisdictions. That is the gap Esco Global Strategies fills.

Is the Caribbean Corridor Right for Your Company?

The corridor is best suited to companies with exportable products that can satisfy value-added transformation requirements in the DR, a defined US market target, and the capital and operational capacity to establish a DR manufacturing anchor. For companies that fit the profile, the Caribbean Corridor represents one of the most structurally sound cross-border market entry pathways currently available for Middle Eastern and European companies seeking US market access.