By Alejandro Fonseca*
The scenario could not be more complex for Mexico. The forecasts for the new year are framed in global geopolitical tension, the return of President Trump with Republican control of both chambers and a global trend towards economic slowdown due to the cut in public spending in countries where elections were held during 2024. Domestically, constitutional changes could have an economic impact by affecting the legal framework for investors.
In 2025, Mexico’s GDP is expected to experience a slight decrease – between -0.5 and -0.9% – due to the cut in fiscal spending, which seeks to reduce the government deficit from 6 to 3.9% of GDP. The threat of an increase in tariffs or additional impositions by the United States – if the Chinese content of domestic production is not reduced or the export of fentanyl is not increased – has greatly increased economic uncertainty, given that export activity represents the 75% of GDP and is related to approximately 1 in 4 jobs in the country. For its part, Banxico’s reference rate will remain around 8.75% due to the increase in labor costs and the insecurity of carriers and the size and scope of the measures that the Trump administration will adopt.
One of the president-elect’s workhorses, Mexico’s trade deficit, will tend to remain around 10 billion dollars due to export behavior motivated by the rise of the United States economy, while the depreciation of the exchange rate It is estimated that it could reach 23.5 pesos per dollar at times of greatest uncertainty due to trade policy.
The rating of the Mexican debt can affect the exchange rate; although the country’s level of investment is maintained, the fiscal deficit and the lack of a more active industrial policy in the face of the nearshoring could harm the rating. In this sense, the rating agencies point out that the economic growth experienced by the country from 2020 to 2024 was 1.7%, less than half the rate of countries rated BBB (3.6% on average).
Given these data, one of the priority challenges is to have a coherent strategy to confront Trump’s trade policy. Responding to the imposition of tariffs with tariffs on this side can trigger a trade war, where the most harmed contender would be Mexico. Therefore, it is necessary to recognize the benefits of what still remains of nearshoring and have a conciliatory and negotiating attitude that privileges coincidences more than differences, seeking consensus on trade, immigration and, above all, public security policies.
A scenario of tariffs on Mexican products of between 10 and 25% could generate more uncertainty and postpone investment decisions. Therefore, the negotiations must take into account the China factor and the concern that Mexico will be used as a springboard to export to the United States without complying with the rules of origin. Mexico needs to respect the USMCA and the renegotiation agreements to avoid agricultural and energy complaints, favoritism to state companies and unnecessary complications. With this, the imposition of tariffs can be prevented and the investment will have a long-term horizon.
Trump’s presidency is perceived as a threat, but it can also represent opportunities. If the southern border is properly managed, if smuggling in the customs system is controlled, if the energy production and distribution system is optimized, as well as security in the transportation infrastructure, and if the state of right, political and economic criticism and accusations could lose force. We should not be bothered or irritated by having defects and tasks to be done pointed out to us, but rather we have the opportunity to take action before it is too late.
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*Alejandro Fonseca is a professor in the Finance and Business Economics Department at EGADE Business School, Tecnológico de Monterrey.
The opinions expressed are solely the responsibility of their authors and are completely independent of the position and editorial line of Forbes Mexico.
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