The fall in investment, the least growth and changing desires of the president of the United States, Donald Trump, led Mexico to support an early review of the North American Commercial Agreement, Tmec, a radical turn to his prior plan to postpone him as much as possible.
Three Mexican officials said that the change was due in part to the need to obtain some long -term certainty around the country’s commercial relationship with its largest export market.
But they said it was also key that Trump seemed to want an early review because the US president has better letters and wanted to try his good side, a central Mexican strategy that showed positive results.
The Secretary of Economy of Mexico, Marcelo Ebrard, declared this week that he hopes that the “formal start” of the review begins as soon as September, despite being provided for in the agreement for 2026.
It is clear that Trump has more influence, said Juan Carlos Baker, former head of Mexico for the TMEC.
“If he believes that Mexico is not cooperating, the risk of one day to appear and announce that the United States will completely leave the agreement,” he said.
Mexico is looking for any clarity that you can find. Uncertainty about commercial standards already affected its economy.
Do not miss: start of review of the TMEC between September and October: Ebrard
Foreign direct investment in the first quarter of the year fell 21% compared to the same period of the previous year, according to figures from the Central Bank of Mexico.
Part of this may be related to the nervousness of the business community before the judicial reform of Mexico. However, uncertainty about tariffs played an important role.
On Wednesday, the Central Bank cut its forecast for the growth of the Gross Domestic Product (GDP) for this year to only 0.1%, while the prediction of the International Monetary Fund is even worse: -0.3%.
“Uncertainty kills the investment,” said Emilio Romano, president of the Association of Banks of Mexico, noting that 40% of Mexico’s GDP depends on the United States.
Mexico’s dependency in the United States makes TMEC negotiations almost existential for the country’s economy and a huge priority for President Claudia Sheinbaum.
Free trade with its northern neighbor led Mexico to overcome China as the main commercial partner of the United States and made it one of the world’s largest car manufacturers.
The Mexican authorities are so concerned about Trump that they delayed the signing of an updated commercial agreement with the European Union for fear that commercial conversations with the United States can endanger, said a European official.
New investments in ‘Stand By’ before the prompt review of the TMEC
Mexico had originally wanted to wait as long as possible before initiating conversations about the TMEC to first resolve bilateral issues such as tariffs imposed by fentanyl traffic and migration, and for US consumers to begin to feel the inflationary pressures of Trump’s rates.
That approach coincides with that of Canada, whose prime minister, Mark Carney, said this week that he wanted to advance in bilateral issues with the United States before starting conversations about the TMEC.
Amid the uncertainty, Ebrard and his Undersecretary Luis Rosendo Gutiérrez were frequently traveling between Mexico and Washington to meet with the United States Secretary of Commerce, Howard Lutnick, a billionaire investor, and Jamieson Greer, a former Air Force.
“It is important to be in Washington simply to address any matter that may arise suddenly. And it is important to be present,” said a Mexican official familiar with negotiations.
“We are taking care of our position in relative terms with other countries.” But negotiations with the Trump administration can be unreliable.
In April, when the boreride worm threatened to decimate the billionaire livestock market of Mexico, the authorities reached an agreement so that the United States did not close its border in exchange for Mexico to do more to combat the plague.
Only 11 days later, the United States sharply closed the border, taking off the frustrated Mexican officials.
The question sign that looms over the future of the TMEC eclipsed the victories of the Mexican negotiating team, including convincing the Trump administration to suspend tariffs on the auto parts that comply with the commercial agreement.
“We leave intensive therapy. We are in intermediate therapy,” said Francisco González, executive director of the National Auto Parts Association of Mexico. He estimated that until the TMEC review is completed, the new investments are “quite suspended, basically in ‘Stand By'”.
With Reuters information
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