Some recent headlines from the business sections in Mexico:
- In the face of tensions with the US, the steel industry will invest 8.7 billion USD between now and 2028
- Trump will add wood to the list of products subject to tariffs, “in March or sooner”
- Tourism builds bridges and is not expected to be affected by tariffs
- Percentages of water consumption in Mexico, by activity [76% is agriculture]
- CFE approves strategic power generation projects and investment in the distribution networks
- How will Trump’s tariffs affect automotive production?
- Mexican Governors’ council backs Sheinbaum in responding to Trump tariffs
- Alsea offsets employee pay increases with enhanced productivity and cost controls
Mexico is more accustomed to macroeconomic volatility than the US and Canada. Let’s also remember that the scores of foreign investors who set up manufacturing in Mexico a generation or more ago did so with fewer guarantees of certainty than are generally assumed today. They and the investors who staked operations after NAFTA and USMCA will have likely modeled, not for tariffs perhaps, but for other costly disruptions. It’s part of the terrain.
With President Trump shaking up particularly the manufacturing landscape’s outlook for profits and productivity, Mexico is responding with notable calm. See: President Sheinbaum’s February and March “friendly phone calls” with Trump as her reactions to tariff orders, versus reactions in Canada. Another explanation, one that is more useful than “we’re used to it,” is that Mexico is aware of worse, or at least more fundamental, challenges it faces internally as a market without regard to unwieldy US leadership tactics. Those are: rule of law, energy costs, water scarcity, workforce productivity, and outsized reliance on trade with the United States, which is the already well-known meta problem underlying the direct and indirect costs of US-imposed tariffs.
These topics come up again and again in business circles in Mexico, and for many companies, if the cost of working in the North American supply chains rises and becomes a less stable bet, that is just another reason to stay focused on the fundamentals. In other words, if Mexico is forced to become less reliant on trade with the US (but not tourism 🌴), Mexicans who are paying attention recognize that is an opportunity for Mexico to become a stronger economy.
From a trade perspective, that is not a bad proposition for US companies hoping to sell into Mexico either.