What’s at Stake for Mexico’s business landscape Post-US Election?

The upcoming US elections will significantly impact Mexico’s business environment, regardless of the presidential winner. At FrontierView, we still anticipate that Donald Trump will win the presidency with a Republican majority in Congress, despite the entry of Kamala Harris to the race and her early advantage in voting intention at the national level. However, Harris still has a fair chance of winning. How would Mexico be impacted by the next US president’s trade policy?

First, Trump’s return to the White House would escalate pressure on Mexico, particularly amid already-strained bilateral relations due to the fentanyl and immigration crises. Moreover, the recent constitutional reforms in Mexico have raised concerns among US private and public sectors. 

The USMCA’s review in 2026 is the main topic on the agenda. The Claudia Sheinbaum administration will try to renew the treaty without major changes and protect Mexico’s sovereignty regarding its trade relationship with China. However, Trump would aim for modifications, like stricter rules of origin for the automotive sector, and stronger barriers to Chinese products entering the US market via Mexico. As Robert Lighthizer, the US Trade Representative during Trump’s term, recently wrote, “Mexico needs to choose whether it wants access to the US market or to serve China’s interests.”

Moreover, MORENA’s reforms of judiciary and autonomous institutions would, in the best-case scenario, intensify doubts about Mexico’s attractiveness as an investment destination, and in the worst-case scenario, give Trump reasons to refuse to review the treaty. 

Trump could introduce additional risks to bilateral trade, having campaigned on a 10% blanket tariff on all imports, specifically targeting countries with which the US runs a trade deficit. While Mexico falls into this category — the US trade deficit with Mexico grew by 56% between 2020 and 2023 — the USMCA could shield Mexico from the blanket tariff. Trump could also bring renewed pressure on Chinese imports — with a proposed 60% tariff — and Chinese cars made in Mexico —with a 100% tariff. These proposals have already impacted Mexico, as both Tesla and BYD have paused their investments in the country due to uncertainty around US trade policy. 

Finally, Trump’s unpredictability brings additional uncertainty. During his administration, he mixed trade, security, and immigration issues as a negotiation tactic. This exposed the Mexican market to complex immigration and security negotiations, as we saw in 2019 when Trump threatened to impose tariffs on Mexican imports unless Mexico aligned with his immigration policy. If he wins the election, he could leverage trade to negotiate issues related to fentanyl trafficking or immigration. 

What if Kamala Harris wins? Voter intention for Harris is steady and the election will be tight. First, Harris is likely to renew the USMCA. It is well-known that in 2020, Harris voted against the USMCA as a senator due to environmental and labor concerns. This suggests that Harris will include additional climate provisions, which could create risks of trade barriers against some Mexican exports — still strongly reliant on fossil fuels — but it could also be an opportunity for the Sheinbaum administration to improve the country’s environmental standards and invest in clean energy. On the labor front, Harris will continue with Biden’s worker-centered trade policy to protect US salaries, limit outsourcing, and promote job creation in the United States. Despite these views, Harris would likely favor the agreement’s renewal. 

A Harris administration could also boost nearshoring in Mexico, as she thinks that supply chains should be less reliant on China. In this sense, she would continue with President Joe Biden’s trade policy focused on protecting key industries for national security — like semiconductors and pharmaceuticals — and “de-risking” supply chains from China. This could bring investment opportunities to Mexico if Sheinbaum cultivates the Mexico-US partnership.

As with Trump, Chinese investments in Mexico would face risks under Harris. She would maintain or even increase pressure against Chinese products aiming to reach the US market via Mexico. While Harris may take a more targeted approach than Trump’s indiscriminate tariffs, barriers to Chinese goods manufactured in Mexico are likely, particularly for vehicles, solar cells, semiconductors, and steel.  

Finally, our assumptions come with a caveat. MORENA’s constitutional reforms, particularly those on the judiciary and autonomous institutions, are raising concerns within the US private and government sectors, potentially endangering the USMCA’s renewal in 2026. The US and Canadian ambassadors to Mexico have already expressed their worries about the impact of the reforms on the agreement. Therefore, the Sheinbaum administration inherits the gargantuan challenge of conciliating these radical reforms with Mexico’s most important partnership.