Mexico’s economy is declining & faces mounting threats
by Macario Schettino.
In my first column for The Mexico Brief, six weeks ago, I wrote that Mexico was in a recession. Now that we are nearing the end of the year’s first half, the evidence is even stronger. Although an unusual event in February has led many to think otherwise, the truth is that we are already seeing a generalized downward trend.
Consumption contracted year-over-year for the fourth consecutive month in March, and the preliminary indicator suggests no meaningful change in April and May. On average, the decline has been -0.5% compared to the previous year, starting from last October when the current administration took office.
In investment, the situation is worse. The decline began in September, and the following seven months have all shown negative numbers, averaging a yearly contraction of -4.4%, also since October.
In overall economic activity, growth since October is flat, with three out of those six months showing contraction. The impact is now noticeable in employment, with monthly declines and virtually zero annual growth. It’s worth remembering that — since the year 2000 — whenever employment grows at a rate below 1% annually, a recession is a certainty.
Except for employment data, which we have up to May, the rest of the indicators end in March and therefore do not yet reflect the full impact of global uncertainty caused by Donald Trump — especially since the “Liberation Day” event on the afternoon of April 2. We don’t know much about what has happened since then, except in the case of remittances, which saw one of the steepest drops on record in April: -12% compared to April 2024.
On Mexico’s imminent risk
by Macario Schettino.
Last Sunday, elections were held in Mexico—very unusual elections that are virtually unheard of in any other country in the world. Judges, magistrates, and justices were elected in order to completely replace the Supreme Court, to create a new Judicial Discipline Tribunal, and to fill the federal and local electoral courts, which had been incomplete. Not only that—more than eight hundred circuit magistrates and judges were elected, for a total of 881 positions.
With this election, and the law that made it possible, the Judicial Branch in Mexico ceases to be autonomous and becomes subordinated to the Executive Branch, which also controls the Legislative Branch thanks to the qualified majorities it obtained illegally just days after last year’s presidential election. Put more simply, Mexico ceases to be a republic and becomes an authoritarian system. The new judges will take office in September.
This new distribution of power—or rather, concentration of power—is a major change from just a few years ago, when the USMCA was signed, and it actually contradicts that agreement. It adds to changes in energy policy, which are also incompatible, and I don't think it will make negotiations for a new deal with the United States and Canada any easier. Even more concerning, the risk for existing investments in Mexico has increased, as the mechanisms previously available for dispute resolution have disappeared.
As new Ambassador arrives, what next for the US & Mexico?
by Gerónimo Gutiérrez.
Six months after President Claudia Sheinbaum's initial call with then President-elect Donald Trump, the state of US - Mexico relations remains something of a puzzle. On the surface, early exchanges between the two leaders suggested a cordial start: Trump publicly referred to Sheinbaum as an "intelligent lady he could do business with," while Sheinbaum described their conversations as "productive" and appreciated what she called his "respect for Mexico." Yet this initial goodwill has given way to a more confrontational tone in recent weeks, reflecting growing difficulties beneath the diplomatic pleasantries that challenge the foundation of Sheinbaum’s strategy.
On the early days of May, Sheinbaum confirmed that she had rejected her counterpart´s offer to use US troops to go after cartels in Mexican territory. Trump in turn opined that she was “so afraid of the cartels she can’t walk”. More recently, news reports in Mexico and the US have suggested that the US government intends cancel the visas and seize the US assets of Mexican politicians from the President’s party, allegedly due to links with drug trade and corruption. Raising the profile of these reports, the Governor of Baja California in the past days confirmed her visa was canceled, although she has alleged no wrongdoing and official information remains scant.
What was already a complex negotiation at the beginning of the year on trade (tariffs and USMCA review), security and immigration, has become more difficult with new irritants. As examples we can point to the case of water management of the shared river basins of the Colorado en Bravo rivers, or the decision by the United States Department of Agriculture to suspend all imports of live cattle due to phytosanitary concerns. In all areas of the relationship tensions seem to be mounting rather than receding. Perhaps the only exception is immigration, where migrant encounters along the border – a proxy used to measure illegal immigration – have drastically diminished in April to 12,035, from 179,737 the same month last year.
Mexico has become a strategic pawn without a voice
In the global game of power, some nations move, and others are moved.
Mexico, the world’s 13th largest economy and the United States’ top trading partner, should be a strategic powerhouse. It has all the credentials: geographic proximity to the world’s leading economy, rich natural resources, a youthful population, and an essential role in global supply chains. And yet, it remains politically paralyzed, its voice barely audible in global decision-making.
Why?
Because Mexico is not a player. It is being played.
While the United States and China engage in trade wars and strategic decoupling, Mexico tightens labor rules and enforces stricter origin standards — not by sovereign design, but to comply with demands from above. While fentanyl ravages U.S. cities, Mexico absorbs the blame, while the weapons that fuel its internal wars flow south from Texas and Arizona. And while the global South begins to awaken — through the expansion of BRICS, new development banks, and climate justice diplomacy — Mexico watches from the sidelines, reluctant to step beyond its assigned role.
If Trump didn’t exist, it would be necessary to invent him
by Jorge G. Castañeda.
Many years ago, in the French philosophy exams at the end of high school (the famous Baccalauréat), students were asked to write a long essay (three hours of writing) on Voltaire’s classic phrase: “If God did not exist, it would be necessary to invent him.” What did the 18th-century satirical philosopher mean? What reflections could that comment provoke regarding other beliefs about human existence?
Today, Mexico’s president, Claudia Sheinbaum has surely considered a similar idea: “If Trump did not exist, it would be necessary to invent him.” The statement may seem paradoxical, as the current president of the United States has done nothing but cause intense headaches for many heads of state around the world. But he has also given a strong boost to many of the Mexican president’s peers: to Zelensky and Macron in popularity polls, to Carney and Albanese in recent elections, to Xi Jinping in China’s sui generis political system. Claudia Sheinbaum’s case is similar.
Indeed, every new front Trump opens in the relationship with Mexico becomes a powerful antidote to the growing challenges the Mexican ruling party, Morena, faces domestically. The fronts with Trump occur daily: fentanyl, methamphetamines, tomatoes, livestock, water in Tijuana, water in the Rio Grande, migration, tariffs, USMCA, China, and whatever else gets added. This without mentioning the disagreements that have not been made public but surely exist at some level: Cuba, Venezuela, and others.
Gabbard’s comments undercut Sheinbaum’s resistance narrative
by David Agren.
A new intervention from US President Donald Trump’s camp is casting doubt on portrayals of Mexican President Claudia Sheinbaum standing up to Trump’s hardline immigration policies. Tulsi Gabbard, Trump’s Director of National Intelligence, praised Mexico’s role in stopping migrants before they reached the US border - but credited that action not to Sheinbaum’s resolve, but to pressure from Trump.
“The President of Mexico told me, sir, she turned around over a half a million people in Mexico before they ever reached our border,” Gabbard told Trump. “We should be counting those as deportations because they never even made it to the border because she turned them around because you forced her to. So those are all people that never even came here because they got the message because you were so aggressive.”
The comments raise questions about Sheinbaum’s efforts to portray herself as a defender of Mexican sovereignty, as she gains praise at home and abroad for her handling of Trump’s threats and demands.
Claudia Sheinbaum’s stoic diplomacy faces its limits
by Andrés Rozental.
Much has been written and said about how Mexico’s President, Claudia Sheinbaum, has managed to avoid the kind of treatment Donald Trump has often reserved for countries with which he has grievances. Some analysts have compared her approach to that of former Canadian Prime Minister Justin Trudeau, who took a more combative stance. Trudeau responded to Trump’s provocations - like his comments about making Canada the 51st state and imposing tariffs on Canadian exports - with reciprocal actions and direct criticism. In contrast, Sheinbaum has never explicitly threatened retaliation. Nor has she directly confronted Trump on major bilateral issues such as migration and drug trafficking - topics Trump campaigned on and has made central to his administration.
Her relatively low-key approach to dealing with Trump, calling for patience and delay before responding to the US President’s constant assaults on Mexico, was seen by a majority of Mexicans, and many international pundits, as a model for how to “manage” a relationship with the author of The Art of the Deal.
Notwithstanding generalized applause for her stoicism and her high popularity, I believe it important to judge whether Sheinbaum’s strategy of accommodation has actually benefitted Mexico more than Chinese, European or Canadian reactions in dealing with Trump.
Editor’s Note: No cause for celebration
by Andrew Law.
Did Mexico dodge Trump’s tariffs? President Claudia Sheinbaum says yes. She told supporters this week that USMCA survived, that Mexico’s economy is strong, and that they should celebrate.
Mexico may have avoided new tariffs. But unlike various peer nations, it was already under heavy ones. Trump’s 25% tariff on non-USMCA auto imports kicked in Wednesday night. That hits over 40% of Mexico’s car exports. Steel and aluminum tariffs remain. And there’s the 25% general tariff on non-USMCA goods - about half of Mexico’s exports. These are already having impacts.
According to Sheinbaum, this week’s events shows the US “respects” Mexico and has a “good relationship” with it. If this is good, I’d hate to see bad.
The overlooked impact of Trump’s auto tariffs
by Luis Lozano.
Donald Trump is obsessed with imposing tariffs to vehicles made outside the United States, but I do not think he has a clear objective for it other than the protection of American jobs. Let’s assume that works. The issue here is if saving American manufacturing jobs will make American cars more appealing to the global markets. Put a different way: will reviving American automotive manufacturing guarantee that the US keeps up with technological changes being led by Asian brands? Unlikely…
The most important thing that the North American automotive business has experimented with in the last 40 years has been NAFTA. NAFTA created an environment of competitiveness that the US had lost with Lyndon B Johnson’s tariffs. Those tariffs disconnected the industry from other markets and needs, ironically hurting the competitiveness of the American brands. They resulted in the United States losing its ability to lead an industry which it invented for the world. It is impressive to see that the US government making the same mistakes today.
Trump & Sheinbaum find it takes two to tango in the delicate USMCA dance
Since the start of the second Trump administration this January, relations between Mexico and the United States have been active, tense, volatile but overall polite. Despite the US administrations’ tough talk on immigration and trade - including the imposition of some tariffs as in the case of steel and aluminum - and the fact that American unilateral military action in Mexican territory against the cartels still remains a possibility, Mr. Trump has maintained a somewhat restrained demeanor with his Mexican counterpart, President Claudia Sheinbaum.
After a telephone call on March 6, both leaders agreed for a second time to a truce on trade tariffs until April 2 for goods imported to the US under the United States, Mexico and Canada Agreement (USMCA). More notable perhaps, Mr. Trump emphasized his respect for Ms. Sheinbaum and noted that relations are moving along albeit the difficult context. The tone certainly contrasts with that used by the US president with Canada, his other North American partner. As of now, Trump still asserts that Canada should become the 51st state, a notion that not only infuriates Canadians but baffles many Americans.