US-China Trade Conflict to Affect Mexico

US election results have become a key element for Mexican trade due to the ongoing trade tensions between the United States and China. Experts indicate that further imposition of US tariffs on Chinese products could negatively impact Mexico's nearshoring efforts, given that China is one of Mexico's largest investors.

Jorge Marmolejo, Vice President and Portfolio Manager, Franklin Templeton Mexico, recognizes the opportunities that nearshoring offers Mexico. However, he notes that the dispute between the United States and China could reduce investment in Mexico. "The fact that this is going so well may end up being a problem. What concerns us most are not the elections in Mexico but those in the United States, because many goods from China are transformed in Mexico, under the umbrella of the USMCA treaty, and then shipped to the United States," Marmolejo says.

Marmolejo emphasizes the US government's concerns about China's increasing influence in Mexico, its largest exporter. In 2023, China ranked as the second-largest investor in Mexico and held the fourth position from January to March of this year. In response to this threat, the US has applied tariff increases on US$18 billion worth of Chinese goods, covering electric vehicles, batteries, steel, and critical minerals.

"It is likely that we (Mexico) will be caught in the crossfire. There may be some rhetoric, or it could indeed become a commercial issue. What concerns us is that we have several unresolved matters with the United States, such as energy policies, rules of origin, and other issues that have been stalled because China is the perceived adversary, and we are seen as allies. However, if we are being used as a waypoint for goods destined for the United States, we will feel the impact in the elections."

Elections in Mexico and the United States

Once every 12 years, Mexico's election for a six-year term and US’ elections for a four-year term coincide. The election results will decide the US-Mexico bilateral relationship for years to come.

Mexican elections are scheduled for June 2, 2024. The latest Enkoll poll, conducted by El País and W Radio, reveals that MORENA candidate Claudia Sheinbaum has 56% of the vote, while Fuerza y Amor por México candidate Xóchitl Gálvez has 36%. Jorge Álvarez, candidate for Movimiento Ciudadano (MC), has only captured 7% of the vote. The outlook suggests that Sheinbaum is on track to become Mexico's first female president. 

Meanwhile, United States' elections will be held on Nov. 5. The Republican Party has nominated former President Donald Trump as their candidate, while Democratic candidates include US President Joe Biden. Experts note that under President Biden's administration, Mexican perspectives toward the United States have significantly improved. However, in recent months, Mexico has been labeled by Trump as an enemy and a real threat to national security.