Mexico Emerges as Unexpected Winner Amid US Tariff Shakeup: WTS

As new US tariffs reshape global trade flows, Mexico is emerging as an unexpected beneficiary. Shielded by deep industrial integration with the United States and a still-functional USMCA, the country has expanded exports and strengthened its position within North American supply chains, according to The Wall Street Journal.

Despite duties on automobiles, steel, and aluminum, Mexican manufactured exports to the United States rose nearly 9% between January and November 2025 compared with the same period a year earlier. While the automotive sector declined by 6%, other manufactured goods recorded a strong performance, rising 17%. The Wall Street Journal estimates that bilateral trade between Mexico and the United States could approach US$900 billion this year.

In this context, Banxico forecasts economic growth of 0.3% for 2025. Although modest, the projection stands well above the 1% contraction anticipated by some analysts. Kathryn Exum, Co-Head of Sovereign Research, Gramercy Funds Management, said the figures underscore the resilience of Mexico’s economy amid a challenging international environment.

The Wall Street Journal also stressed that Mexico has managed to keep nearly 85% of its exports tariff-free under the USMCA, easing concerns that the agreement could become a treaty that is intact on paper but weakened by unilateral trade measures.

The administration of President Claudia Sheinbaum has strengthened cooperation with the United States on border security and imposed tariffs on Chinese products, taking steps to avoid harsher penalties. “Mexico has handled its relationship with the United States in a largely constructive way,” Exum noted.

The Penn Wharton Budget Model stressed that although Mexico faces its highest tariffs in decades, its average effective tariff burden stands at 4.7%. By contrast, China faces an average rate of 37.1%.

This differential has positioned Mexico as one of the most competitive suppliers to the US market and helps explain why it captured 25% of the reduction in the US trade deficit with China, according to US Trade Representative Jamieson Greer. Deep industrial integration and geographic proximity further enhance Mexico’s competitiveness.

Experts expect Mexico and Canada to retain their competitive advantages through the 2026 USMCA review, reinforcing Mexico’s position as an unexpected winner of Trump’s trade war. “The level of integration is such that the cost of dismantling USMCA would be enormous,” said Luis de la Calle, Member of Mexico’s negotiating team during the original NAFTA talks.

Mexico’s Growth Lags Behind Regional Peers 

While Mexico has not been affected by US tariffs as severely as other countries, in Latin America it is expected to post one of the weakest growth rates for a second consecutive year, according to ECLAC. The commission projects Mexico’s economy to expand by just 0.4% this year, well below the regional average of 2.4%, as trade uncertainty, declining investment, and weaker consumption continue to weigh on activity.

ECLAC attributes the slowdown to reduced private consumption, a sharp fall in public and private investment, higher unemployment, and lower remittances, alongside uncertainty over access to the US market. Mexico, which exports more than 80% of its goods to the United States, has been particularly exposed to these dynamics.

Looking ahead, ECLAC expects Mexico’s economy to recover gradually, with growth forecast at 1.3% in 2026, supported by improved trade certainty, the anticipated ratification of USMCA, and increased tourism linked to major international events.