01 / 16 / 25
Mexico’s Challenges Under President Donald Trump’s Administration
MEXICO CITY, MEXICO, January 16th, 2054 –The upcoming inauguration of U.S. President Donald Trump presents several challenges that Mexico must address collaboratively across various issues, such as immigration and border security, drug trafficking, and trade concerns. Among these are issues related to the entry of products with Chinese content into the U.S., which may result in measures aimed at imposing tariffs on Mexican goods. In response to this situation, Mexico has prioritized addressing immigration and drug trafficking issues in its immediate agenda including sizing chinese products that have apparently entered the country illegaly, aiming for swift and positive outcomes ahead of Donald Trump’s inauguration on Monday, January 20, 2025.
In this context, the Mexican government led by Claudia Sheinbaum, has taken a proactive stance. On December 3, 2024, the Mexcian Congress passed legislation to strengthen efforts against fentanyl trafficking and consumption, a crisis that severely impacts the United States. During a conversation with Trump, Sheinbaum emphasized national initiatives to curb fentanyl use through extensive awareness campaigns. She also reaffirmed Mexico’s willingness to collaborate on security and migration matters within a framework of mutual respect and the preservation of national sovereignty.
The nearshoring phenomenon has benefited both Mexico and the United States, bolstering supply chains. Thanks to the geographic proximity of the two countries, competitive costs and preferential market access under the USMCA (T-MEC), Mexico has solidified its position as a key destination for relocating value chains. However, the potential imposition of tariffs on mexican products could threaten this momentum by increasing production costs and discouraging investment.
With the USMCA scheduled for review in 2026, it is critical to focus efforts on ensuring compliance with the treaty’s rules rather than erecting trade barriers. Ensuring that products adhere to regional content requirements and other provisions, such as labor standards, would not only strengthen trade relations between the two countries but also preserve the benefits of nearshoring.
On January 13, 2025, Claudia Sheinbaum announced “Plan Mexico,” a comprehensive strategy to position the country as a regional leader in economic development and social equity. This ambitious plan involves a $277 billion investment spread across 2,000 projects targeting key sectors, including textiles, automotive, pharmaceuticals, aerospace, agribusiness, and electromobility.
The primary objectives include positioning Mexico as the world’s tenth-largest economy by 2030, increasing public and private investment to 28% of GDP and reducing approval times for investment projects from 2.6 years to one year. The plan also aims to reduce poverty, raise the minimum wage, create 1.5 million jobs in specialized manufacturing and strengthen the connection between education and strategic industries.
By 2025, the strategy includes incentives for company relocations, a fund for small and medium-sized enterprises, the construction of 10 new industrial parks, streamlined investment procedures and a digitalization initiative. Furthermore, it proposes increasing domestic product consumption in key sectors by 50%, reducing pollutant emissions and upgrading irrigation systems in 50% of districts to improve food production and ensure water availability for human consumption.
Plan Mexico seeks to deepen North American regional integration to counteract the decline in competitiveness relative to China. It highlights that while China’s share of global trade grew from 1.8% in 2000 to 13.6% in 2023, North America’s share fell from 19.8% to 13.8% during the same period.
Additionally, the plan aims to leverage the USMCA’s potential to reconfigure regional supply chains. According to an analysis by the Ministry of Finance, replacing 10% of imports from China with North American production would yield significant economic benefits: an estimated 1.2% increase in Mexico’s GDP, 0.8% in the United States, and 0.2% in Canada.