The Changing Relationship Between Government and Business

Is the relationship between government and business really changing?

The relationship between the private sector and government has always run hot and cold. Whether governments are business-friendly or not, they always open bids for procurement, create legislation for regulating business activity, work with business to further public policy, or create infrastructure to facilitate trade and investment. I, for one, prefer to keep government at arm’s length, though I know this is not a realistic proposition at all times (it is also not possible to avoid government in all cultures). As we are seeing more partiality in politics, there is less accountability from governments as more unconditional demands are placed on the private sector in their collaboration with public policy.

Conflicts between government and business are once again becoming more common, creating a climate of low trust. As a case in point, Mexican private businesses in the pharmaceutical/medical equipment sector have certainly not benefited from their dealings with the public sector over changes in public procurement policy and public health sector reforms. Now, with very public threats of retaliatory action if suppliers do not follow through with delivery of unpaid medicines and medical equipment, one wonders if the advantages of working with the governmental buyer are worthwhile for them any more.

Populist governments are increasingly using private companies as punching bags. US President Donald Trump with CNN and ABC, Mexico President Claudia Sheinbaum with Televisión Azteca, and the Chinese Communist Party with Jack Ma all use these entities as "bad examples" and as being "unrepresentative" of national interests in order to further their political agendas. Indeed, governments often see private companies as a political threat in themselves, as is the case with Sheinbaum versus Ricardo Salinas Pliego (of TV Azteca); the president claiming that the private businessman has been evading millions in taxes, all the time while seeing him as a potential contender in the next presidential race.

In the wake of the upcoming USMCA renegotiations starting in January 2026, the Mexican government is trying to befriend the private sector once again by creating the impression of a united front. The Consejo Asesor de Desarrollo Económico Regional y Relocalización de Empresas (CADERR), coordinated by Altagracia Gomez, is a group of companies from key sectors designed to promote the Plan de México governmental economic development plan with the private sector. They are hastily attempting to rally companies into investing in the Mexican economy. This may be a difficult proposition in the light of such unsettling legislative policy initiatives as the recent judicial and electoral reforms.

In the United States, Trump’s government has been particularly active in meddling in the private sector: Tik-Tok, Intel, Trilogy Metals, and U.S. Steel. Governmental influence in private business in the United States is hardly new, but these interventions have been more transactional than strategic. Gone are the days when a US government would support companies by investing in research and development, which was necessary for the pursuit of knowledge and innovation. Governments would participate in areas that would be considered as being too risky for private industry or where companies could not be protected by intellectual property law. Governments now shy away from such risk in favor of winning more short-term political gains.

The new Mexican Customs Law is a good example of how the content of business law is really a byproduct of related policy. The law is being hailed by the congressional majority as a triumph for transparency and efficiency at customs, creating greater productivity and opportunity for commerce opportunities with Mexico. Ricardo Monreal, president of Mexico’s lower chamber, considers that “the reforms to the Customs Law will have a positive impact against corruption, influence peddling, and extortion.” Indeed, the Reform itself claims it strives to “modernize and strengthen Mexican foreign trade.” In truth, much of this is in response to corruption scandals related to customs authorities (the Navy, in the case of Mexico) accused of permitting fiscal evasion of bootlegged fuel at customs. The new Customs Law begins to look like a symbolic gesture of responsibility and integrity that unnecessarily slows down logistical processes for law-abiding businesses.

The crony capitalist is always the winner from collaboration with government, and the year 2025 is no exception. As a case in point, Carlos Slim of Grupo Carso has once again landed a lucrative deal with the Mexican government, this time for Mexico’s state-owned oil company PEMEX, to drill the untapped Lakuch oil reserve for a cool US$2.6 billion. It is of no consequence whether the federal government is left or right wing, business-friendly or not, Mr. Slim always seems to come through as a private contractor with the government sector! This age-old spirit of favoritism once again puts smaller companies at a disadvantage when bidding for government contracts as potential suppliers.

As a conclusion, I recently attended the Energy Day convention in Mexico, organized by the British Chamber of Commerce, and found the political more than business focus of the event fascinating. In an event where one would expect to hear more on innovation in alternative energies, I found out more about recent governmental policy in the energy sector opening up opportunities for private collaboration. It was a textbook case of the government taking center-stage, private business associations heading the call, and a few experts debating, with the private sector generally sitting passively on the receiving end, more than assertively presenting their own agenda. This was an excellent illustration of the strategic relationship between government and business specifically in Mexico, and how the power element plays a crucial role in the energy sector. Some things never change!