Donald Trump has not traditionally been seen as an ally of Mexico. During his first term, he initiated the construction of a border wall, renegotiated NAFTA (the North American Free Trade Agreement), which became the USMCA with stricter conditions for Mexico, and oversaw large-scale deportations publicly criticised by the President himself.
Given this context, Mexico and investors remain concerned that a second term may present similar challenges.
Mexico did not escape “Liberation Day” on 2 April 2025, when tariffs were announced on imports from around the world. However, trade under the USMCA, which accounts for around 80% of Mexican exports, is exempt from these tariffs. This situation provides Mexico with a significant competitive advantage and privileged access to the US market.
Relations remain strained
Tensions persist between Mexico City and Washington. The White House remains concerned about Mexican cartels and has threatened possible military intervention. Washington has warned of increased tariffs if Mexico supplies hydrocarbons to Cuba, which now lacks Venezuelan oil. The upcoming USMCA review on 1 July may also impose stricter conditions.
Internal markets as an alternative
President Sheinbaum aims to ease tensions and capitalize on Mexico’s strengths. The US dollar has weakened, while the Mexican peso has appreciated by 3% against the euro in 2026, supported by foreign investment.
Inflation is stable at 3.8% in December, down from nearly 9% in 2022. The policy rate has decreased from 11% in March 2024 to 7%, supporting private investment and domestic consumption. US industrial supply chains remain deeply intertwined with Mexico, making disengagement difficult. Faced with the choice between China and Mexico, the United States is likely to favour its southern neighbour, perceived as less threatening. Mexico stands to benefit.
The country is well-positioned
Mexico’s privileged access to the US market positions it to attract investment across North America. Lower borrowing costs are expected to further stimulate domestic demand.
The outlook remains positive, and opportunities to invest are still available. Mexico is included in our portfolio.