2026: 3 External Trends Mexican Executives Can’t Ignore

Business executives must navigate an increasingly complex and fast-moving external environment. This year, markets experienced a tsunami of macroeconomic, regulatory, and political changes. In this setting, business leaders need to navigate waves of information and identify the most impactful trends for their operations. To help executives cut through the noise, we outline the three macroeconomic trends that will matter most to them in 2026: The ongoing transition into a politically centered trade system, the renegotiation of the USMCA, and slow economic activity in Mexico.

Politics Will Continue Driving Global Trade

Companies will continue navigating the long-term transition from an institutionalized trade system to a politically driven one. Over the last decades, global trade has operated under a US-led system grounded in relatively institutionalized rules. However, in 2025, this system dramatically accelerated its erosion, leading to a more protectionist trade system dominated by nationalism and security priorities.

As a result, 2026 will be marked by a continued clash between protectionism and free trade, mostly in US courts, Congress, and crucially, in midterm elections. Courts will continue playing a key role in defining the limits of executive powers, particularly in the case of IEEPA tariffs, or the 25% tariff on non-USMCA-compliant Mexican goods. It is worth noting that if the Supreme Court rules against IEEPA tariffs, the Donald Trump administration will likely impose more tariffs via different legal mechanisms, while Section 232 tariffs on steel, aluminum, and autos would remain in place. Therefore, Mexico will continue facing tariffs in 2026, though they may remain lower than those of its competitors.

Despite its Republican majority and a general alignment with the administration, Congress will continue exerting influence on Trump’s policies through formal oversight, which will likely remain limited, and informal channels, including corridor talks with the White House on the USMCA renegotiation and US-Mexico security issues that will continue affecting the trade relationship.

Finally, the US midterm elections in November will be the ultimate check on Trump’s trade policies. With 35 of 100 Senate seats, all 435 House seats, and 36 governorships up for election, the results could significantly alter Washington’s balance of power. In turn, this would have an outsized impact on global trade. In the most likely scenario, the Democrats win a majority in the House, though the post-election disputes may be more contentious than in prior cycles.

Companies should anticipate a global environment with lower economic growth, more complex trade regulations, and higher volatility from political events. For example, at FrontierView, we forecast that the global economy will slow down, from 3.3% between 2022-2025 to 3% between 2026 and 2030.

Moreover, tariffs are here to stay. While the legal mechanisms to impose them and the exact rates will change, it becomes increasingly clear that countries are moving toward protectionism, including Mexico, with growing pressure to impose tariffs on China and other countries without free-trade agreements.

Finally, FX and inflation will continue facing volatility risks. While we do not anticipate a strong MXN depreciation (average of 19 MXN:USD), the peso could significantly depreciate if low-probability events occur, like a failure to extend the USMCA or a unilateral US military intervention against organized crime. Inflation will likely hover just below 4% — Banxico’s upper target — but will also remain vulnerable to a fragile trade landscape and local climate risks, like droughts affecting agricultural production.

The USMCA Will Endure, But Only After Long Negotiations

The ongoing negotiations to renew Mexico’s most important free-trade agreement will shape stability in 2026. In our view, the treaty will survive, but the Trump administration will push for changes, triggering a long and multilayered negotiation process. While the current rules will remain in place, a redesigned treaty could enter into force until late 2027 or even 2028 due to US Congressional approval processes. Still, this would provide greater stability for the regional trade landscape.

Most proposed changes to the USMCA are expected to favor the United States, with Mexico and Canada reluctantly agreeing. Trump may push for stricter rules of origin and labor requirements, particularly for automakers. Stronger enforcement mechanisms are also on the table. Energy and agriculture are likely to be points of friction, with the United States potentially seeking compensation for Mexico’s support of state-owned enterprises. Another possible demand is tighter controls on Chinese economic influence, aimed at preventing Chinese products from entering the United States via Mexico.

Under this base case scenario, Mexico would benefit from global trade shifts despite changes to the USMCA, improving its strategic position as the main supplier of the US market. This means that foreign investment would gradually recover in 2026 and potentially expand at a much faster rate in 2027 and beyond. However, next year, investment will remain constrained by local conditions, namely the structural barriers that continue limiting Mexico’s economic growth. 

Slow Economic Growth, Fiscal Limitations

The domestic business environment will continue to be shaped by slow economic activity, although the economy will move faster than in 2025. At FrontierView, we forecast GDP growth of 0.6% in 2025 and 1.3% in 2026. This means that next year, growth will fall short of the 1.7% average recorded between 2008 and 2019.

The fiscal deficit continues to weigh on economic growth. In 2025, the government reduced spending by -3% in real terms, with programmable spending declining 7.5% while non-programmable spending rose 9.3%, meaning that debt and pensions are absorbing a sizable share of funds from infrastructure or policy. Fiscal challenges are likely to persist at least through 2027, but in 2026, programmable spending is projected to increase by 4.6%, supporting higher employment and economic activity.

Private investment is unlikely to see high growth in 2026, given lingering uncertainty from global conditions and domestic reforms, but it should recover relative to 2025. A year ago, Mexico was navigating the fallout from a controversial reformist wave and Trump’s victory, including renewed tariff threats. These factors created a near-perfect storm for the investment climate. While headwinds will persist, investors are beginning to chart these complex waters, and Mexico may even regain some of its nearshoring appeal amid a US–China decoupling.

Exports will support economic growth in Mexico, especially if the United States continues to underenforce its tariffs on Mexico and to provide exemptions. However, this remains contingent on a collaborative relationship between Mexico City and Washington. We project US GDP to slightly increase from 1.7% in 2025 to 1.8% in 2026.

Our View

These three trends paint a challenging macroeconomic landscape, but they also present opportunities. The Claudia Sheinbaum administration will leverage the business community to renegotiate the free trade agreement, opening public-private communication channels and improving access to key government decision makers. Moreover, the challenging US-Mexico relationship underscores the need to avoid complacency and diversify market opportunities. Finally, slow economic growth will push companies toward greater operational efficiency and innovation, enhancing the competitiveness of the most resilient firms. By identifying key trends and their operational implications, executives can proactively drive adaptation and unlock value.