Globalization, Regionalization, Nearshoring & Tariffs

Since early 2025, a wave of US tariffs has disrupted key trade sectors in Mexico, from steel and aluminum to automotive products and industrial imports. These measures have shaken export markets and increased uncertainty for investors. While USMCA exemptions have provided limited relief, Mexico continues to negotiate with Washington to protect its industries and jobs.

Martín Toscano, President, CAMEXA, shared a balanced view of Mexico’s current landscape and the upcoming USMCA review. “Depending on the industry or sector, the situation varies,” Toscano said. “But overall, our most recent survey among member companies shows slightly better results than the previous one regarding Mexico’s economic outlook, which is an encouraging sign.” He described the business sentiment as one of measured realism: “It is not euphoric, but it is far from apocalyptic either.”

US Tariffs Shake Mexican Exports

In February, just days after his inauguration, President Donald Trump imposed 25% tariffs on imports from Mexico and Canada, citing both countries’ alleged failure to address illegal migration and fentanyl trafficking. While an exemption was later granted for products meeting USMCA rules of origin, the 25% tariff still applies to goods without certification. Mexico viewed this as a sign of constructive engagement, while Canada responded with a firmer stance, signaling possible retaliatory measures.

On March 12, a 25% tariff was applied to all steel and aluminum imports, which rose to 50% on June 4. Mexico reported a 60% drop in steel exports to the United States in April, prompting urgent appeals from the government. Minister of Economy Marcelo Ebrard and other officials are leading efforts to secure exemptions, while President Claudia Sheinbaum emphasized defending jobs, supporting industry, and pursuing fair trade conditions.

In April, Trump announced the so-called “Liberation Day” tariffs, introducing a baseline 10% levy on imports from most countries, later targeting 60 nations with higher tariffs, subject to a 90-day deferral for all but China. As USMCA members, Mexico and Canada were exempt from these additional tariffs.

Automotive imports also faced pressure. On April 2, a 25% tariff on foreign-manufactured vehicles was imposed, later expanded to engines and components. Mexico negotiated a reduction to approximately 15% for vehicles assembled in Mexico using domestic content. Despite relief, rising costs remain a challenge, with Ford projecting US$1.5 billion in reduced earnings due to tariffs.

In July 2025, the United States proposed a 30% tariff on other Mexican imports, temporarily suspended for 90 days while Mexico addresses non-tariff barriers. These include regulatory delays in pharmaceuticals and medical devices, bans on pesticides and glyphosate, and restrictions in energy, lithium, agriculture, and transport sectors. The measure also addresses monopolistic practices in telecommunications, limitations on genetically modified crops, and enforcement gaps against piracy and smuggling. Unlike existing tariffs of 25% on automobiles, 50% on steel, aluminum, and copper, and a 17.09% duty on tomatoes, the new 30% tariff is conditional and targeted, designed to incentivize reform rather than act as a blanket levy.

Most recently, the United States announced a new tariff structure for medium- and heavy-duty vehicles (MHDVs) and key components, effective Nov. 1, 2025. Under USMCA rules, a 25% tariff applies only to non-US content of qualifying vehicles, while trucks or parts failing to meet origin requirements face the full 25%. Buses will carry a flat 10% tariff, and critical components such as engines, transmissions, tires, and chassis are also included. US manufacturers assembling vehicles domestically may claim a 3.75% tax credit on light, medium, and heavy-duty vehicles, extended through 2030. Between January and July 2025, the US imported US$32.41 billion in trucks, buses, and specialty vehicles, with Mexico as the top exporter at US$25.86 billion, a 13.8% decline year-on-year.

In Business, Money Always Wins

For Jorge Sánchez, International Trade and Customs Partner, KPMG Mexico, economics will ultimately outweigh politics. “In business, money always wins,” Sánchez said. “No matter the political narrative, economic interests lead the way. The proximity between Mexico and the United States, and the strength of Mexico’s internal market, make it very hard to unwind that relationship.”

He added that companies must now operate under two mindsets, pursuing growth and efficiency while also protecting against regulatory and geopolitical risks. “Foreign trade is no longer just transactional, it is strategic,” he said.

Mexico’s Response and Nearshoring Opportunities

Despite these headwinds, Mexico remains a top global investment destination, ranking 11th worldwide in 2024 with US$37 billion in foreign direct investment (FDI), up from US$36 billion in 2023. While foreign investment in the industrial sector fell 17.5% in 1Q25, companies like Ford and Seojin Mobility continue to expand operations.

Minister of Economy Marcelo Ebrard confirmed that talks with the United States over the 30% tariff proposal are 90% complete, with expectations of a stable bilateral agenda ahead of the 2026 USMCA review. He reaffirmed that the treaty will remain trilateral, despite occasional political speculation about bilateral alternatives.

Ebrard also noted ongoing negotiations over steel and aluminum tariffs, as well as 1,776 active projects worth US$297 billion in Mexico’s investment pipeline. “No project has been canceled; on the contrary, we keep adding new ones,” he said, adding that Nvidia’s CEO will visit Mexico in November for the launch of the country’s “Mexican Artificial Intelligence Language” initiative.

Resilient Outlook

Francisco González Díaz, Director of Economic Analysis for Mexico, Banorte, acknowledged that nearshoring in Mexico remains active, though at a slower pace than during the post-pandemic surge. “Nearshoring is still happening, but the pace has definitely slowed,” he said. “The Trump factor, without a doubt, has put the brakes on several investments.”

González pointed to Plan México, presented in April, as a clear indication that the government aims to strengthen North American supply chains and reduce dependence on China. The reform to the General Import Tariff Law, which introduced 1,463 new tariff categories, “sends a strong signal: China is no longer seen as an alternative or an ally. The United States will remain Mexico’s main trade partner,” he said.

Despite the uncertainty, business leaders agree that Mexico’s economic fundamentals remain robust. Trade between the United States and Mexico now exceeds US$2 billion per day, underscoring North America’s unmatched economic integration.

“Restructuring it would require infrastructure, investment, talent, and raw materials; an entire ecosystem that cannot be easily replaced,” said Martín Toscano, President, CAMEXA. As Mexico navigates tariff pressures and shifting global dynamics, its resilience, strategic location, and industrial strength continue to position it as a cornerstone of the region’s competitiveness. 

“There is no other region as economically relevant as North America,” he concluded.