CIUDAD JUAREZ, Mexico (Reuters) -For 11 years, Fabiola Galicia worked her way up the ranks at a factory that produced decorative ribbons in Ciudad Juarez, just across the border from El Paso, Texas. Starting as a production line worker, she was eventually promoted to manager overseeing 30 employees.

But in June, her shift was cut to just three days a week. Then in August, a representative for Design Group Americas, which filed for bankruptcy protection last month, shut down its Ciudad Juarez factory, leaving Galicia and some 300 other workers without jobs.

In court filings, the company partially blamed its troubles on tariffs imposed by U.S. President Donald Trump. Galicia said a company representative also blamed Trump. "They told us the tariffs had affected the company," said Galicia, whose husband also worked at the company and was laid off.

Design Group Americas didn't respond to a request for comment about the layoffs.

Assembly plants in Ciudad Juarez, which import raw materials mostly duty free from around the world and export the finished product to the U.S., are in crisis. Trump's global trade war has added misery to an industry already facing a litany of challenges including rising wages and investor concern over reforms by Mexico's ruling leftist Morena party.

Known as maquiladoras, the plants account for roughly 60 percent of jobs in Ciudad Juarez. For decades one of the most important manufacturing hubs in Mexico, the city's industrial sector benefited in recent years as large numbers of multinational companies moved operations to Mexico to avoid U.S. tariffs on Chinese-produced products in a trend dubbed 'nearshoring.'

But after booming growth and employment, many plants are now shedding workers and in some cases shutting down altogether.

Between June 2023 and June 2025, the municipality of Juarez lost more than 64,000 factory jobs, including nearly 14,000 in the first six months of the year, according to Mexico's National Institute of Statistics and Geography.

'CHERRY ON TOP'

The mass layoffs underscore the challenges facing Mexico's economy, which depends on free trade with the U.S.

Projected GDP growth for 2025 has stalled to less than one percent as companies struggle to stay afloat amid Trump's on-again, off-again tariffs.

Maria Teresa Delgado, vice president of the maquila association INDEX Juarez, said the industry is in "crisis." Besides tariffs, she and six other business experts attributed the layoffs in Juarez to a combination of factors.

Factories experienced a decline in profit margins following a federally mandated increase in the minimum wage, they said. The minimum wage in Mexico's northern region has risen since 2019 from 22 pesos an hour ($1.17) to 52.48 pesos ($2.80).

Then, in 2023, Mexico's former president proposed a major judicial reform-to replace appointed judges with elected judges, raising alarm among foreign investors and hampering investment because of the threat to judicial independence. The reform was enacted this year.

But Trump's trade war was the tipping point, Delgado said. While a majority of Mexican exports enter the U.S. duty free, there are high tariffs on the automotive industry and products like steel, aluminum and some textiles.

"Trump's tariffs were the cherry on top," Delgado said about the layoffs.

Foreign direct investment in Mexico fell 21% in the first quarter of 2025 compared to the same period a year before. In the state of Chihuahua, where Ciudad Juarez is located, foreign direct investment in manufacturing declined 56%, from $800 million to $348 million.

"Uncertainty is impacting the business environment," said Ulises Alejandro Fernandez, Chihuahua's Secretary of Innovation and Economic Development. "Companies are holding off on making decisions and making new investments until there is clarity about what will happen with trade policy."

Some companies are already pulling out of Ciudad Juarez as they move to countries with lower labor costs or decide to invest in the U.S. to avoid tariffs.

Earlier this year, automotive parts-maker Lear Corp announced it will relocate some production lines from Ciudad Juarez to Honduras, in what it described as a broader strategy to reduce costs amid shifting demand and rising wages in Mexico's northern border region.

French electronics manufacturer Lacroix plans to shut down its operations in Ciudad Juarez by the end of this year. The company cited sustained losses and trade uncertainty as key reasons for its exit from North America.

Thor Salayandia, president of the regional business coalition Border Block Trade, said he has had to cut employees at his hardware factory in Ciudad Juarez that produces nails. He now has 20 employees, down from around 90 in 2023, he said.

"Clients are cutting costs. One day they place an order, the next they don't."