MEXICO Trends and Developments Contributed by: Javier Domínguez, Santiago Carrillo and Gabriel Torres, Ritch Mueller
ing renewable energy usage and strengthening the resilience of industrial parks. The federal government’s energy management model priori - tises strategic zones to ensure a reliable energy supply for both existing operations and future developments in industrial parks. Conclusion In the end, the tariffs announced on “Liberation Day” cause many of Mexico’s competitors, such as Vietnam, China and Taiwan, to lose com - petitiveness in the US market and reinforce the incentive to import more from countries, such as Mexico or Canada, that do not have tariffs or have lower tariffs, and therefore give Mexico a competitive advantage over such countries. Regarding the tariffs imposed on automobiles and automobile parts, the negative impact is exacerbated by the complexity of the supply chains between the two countries. Many indus - tries, such as the automotive sector, rely on components that cross borders multiple times during their production. The imposition of tariffs increases operating costs and could lead com - panies to reconsider their operations in Mexi - co or even consolidate them within the United States to avoid additional costs. The uncertainty generated by these policies is also discouraging foreign direct investment in Mexico. Investors perceive elevated risks in an environment where trading rules can change abruptly. In addition, these tensions have led to a significant depreciation of the Mexican peso – up to 23% in 2024 – which, while it may par - tially offset higher labour costs, also generates economic volatility.
The tariffs imposed and the new tariff threats promoted by Trump represent a significant obstacle to the development of nearshoring in Mexico. Although the country has clear competi - tive advantages, such as those stated above, and benefits from its geographic proximity and low labour costs, the uncertainty generated by possible changes in trade rules deters key investments and puts the potential benefits of the USMCA at risk. The commitment to nearshoring and the pos - sibility of consolidating greater integration in supply chains represent key elements to coun - teract the negative effects of the United States’ aggressive trade policy. Nearshoring offers Mexico a unique opportu - nity to mitigate the economic slowdown pro - jected for 2025. However, to capitalise on this phenomenon, it will be essential to address the aforementioned challenges, invest in infrastruc - ture, improve security and ensure fiscal stability. In this way, Mexico will be able to strengthen its business ecosystem and attract high-value investments.
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