Newsletter: Mexico’s International Trade Outlook for 2025

02 / 02 / 25

Newsletter: Mexico’s International Trade Outlook for 2025

MEXICO CITY, MEXICO, February 1^st, 2025 – 2025 is set to be a year of significant challenges and transformations for Mexican international trade, especially regarding its relationship with the United States and possibly with Asia. On the one hand, the recent inauguration of Donald Trump as President of the United States has introduced new dynamics into the bilateral relationship with Mexico, especially in terms of international trade, security and immigration (topics that will be linked to international trade with Mexico in the Trump administration). Since the day he took office, President Trump has issued a series of executive orders that will have consequences for his trade relationship with Mexico and the rest of the world. The most sensitive action is the announcement made on February 1st by Trump regarding the implementation of a 25% tariff on imports of products from Mexico and Canada and a 10% tariff on products from China.

On the other hand, the Mexican government, in an effort to boost its competitiveness, tax collection, strengthen its national economy and its integration into the region of the United States-Mexico-Canada Agreement (“USMCA”), has launched initiatives such as the “Mexico’s Plan” and the “Master Plan 2025”. Specifically in relation to the implementation of additional tariffs on Mexican products announced by the Trump administration, President Claudia Sheinbaum has responded that tariff and non-tariff measures will be imposed in retaliation for the 25% tariff on its exports to the United States.

This newsletter offers an analysis of the most relevant strategies, measures and initiatives adopted by Mexico and those adopted by the United States that will have effects on Mexico.

I. Measures adopted by the United States since Trump’s arrival in the Presidency.

I.1. Imposition of tariffs on Mexican products

From November 25, 2024, during his presidential campaign, Donald Trump declared that, as of January 20, 2025, a 25% tariff would be applied to all products imported from Mexico and Canada, arguing the need to stop the “invasion” of drugs and illegal migrants.

However, the executive orders signed on January 20, 2025, during his inauguration did not include the imposition of tariffs. On January 23, 2025, during his participation in the World Economic Forum in Davos, President Donald Trump identified progress in negotiations with Mexico regarding migration and drug traffic.

However, on January 30, 2025, President Donald Trump reaffirmed his intention to impose a 25% tariff on all imports from Mexico and Canada, effective on February 1, 2025, justifying that the measure would be a response to illegal immigration into the United States and to the trafficking of fentanyl on the southern border of the United States. This measure seeks to get both countries to collaborate on these matters.

On February 1, 2025, President Trump announced the implementation of an additional tariff of 25% on imports from Mexico and Canada and 10% on imports from China, arguing that the immigration and drug crisis, including the entry of fentanyl, constituted a national emergency in the United States. Likewise, Trump accused the Mexican government of having an alliance with the drug cartels.

On the other hand, since his inauguration on January 20, 2025, President Donald Trump has issued a series of executive orders that will affect the trade relationship between the United States and Mexico:

I.2. America First Trade Policy

On January 20, 2025, Trump issued the executive order entitled “America First Trade Policy,” through which he asked various secretaries of state and senior officials of the United States government to carry out certain actions and tasks that must be completed and reported to President Donald Trump before April 1, 2025. These tasks are outlined below:

Secretary of Commerce: Review of tariffs and domestic trade remedies.

The Secretary of Commerce, in consultation with the Secretary of the Treasury and the United States Trade Representative (“USTR”), will investigate the causes of recurring United States trade deficits and assess their impact on the economy and national security. As a result of his analysis, he should recommend corrective measures, including the possibility of establishing a global supplementary tariff.
The Secretary of Commerce shall review the anti-dumping and countervailing measures in force in the United States; evaluate the effectiveness of current policies on transnational subsidies, cost adjustments, affiliations, and the methodology of zeroing; review verification procedures in cases of dumping and subsidies; and consider modifications that reinforce the compliance of foreign governments and companies in these processes.

– USTR: review of trade agreements and trade remedies imposed by other countries.

The USTR, in coordination with the Secretary of the Treasury, the Secretary of Commerce, and the Top Trade and Manufacturing Counsil, will identify unfair trade practices implemented by other countries and recommend corrective measures to ensure a level playing field for US companies.
In relation to the USMCA, the USTR shall initiate the process of public consultations prior to its review scheduled for July 2026. Additionally, it will evaluate the impact of the treaty on American workers, farmers, and businesses, and will submit a report to Congress on the current status of the agreement and any pertinent recommendations.
The United States Trade Representative will conduct a review of existing trade agreements to assess the need to modify bilateral or sectoral agreements, including World Trade Organization (“WTO”) agreements, in order to ensure reciprocal and fair conditions for the United States. As part of this review, he will also identify opportunities to negotiate new bilateral or sectoral trade agreements that will expand access to foreign markets for US exporters.
The United States Trade Representative will analyze the impact of trade agreements on federal procurement, assessing how treaties such as the WTO Agreement on Government Procurement affect the implementation of the executive order “Buy American and Hire American”. As a result of the above, he should recommend modifications that prioritize American companies and workers in government procurement processes.

– Secretary of the Treasury: Creation of a new federal agency to collect tariffs and other international trade contributions.

The Secretary of the Treasury will analyze the feasibility of establishing a new federal agency to optimize the collection of tariffs, duties and other revenues derived from international trade, to be called: External Revenue Service. This agency will manage and collect tariffs imposed on countries that, according to the administration, do not comply with US immigration policies or that participate in unfair trade practices. Furthermore, this agency will evaluate the exchange rate policies of the United States’ main trading partners, examining the exchange rates with the dollar and determining whether there are currency manipulation practices that provide an unfair commercial advantage to certain countries. Based on these findings, it should recommend measures to correct exchange rate imbalances.
Regarding import policy, the Secretary of the Treasury, in consultation with the Secretaries of Commerce and National Security and the Principal Advisor for Trade and Manufacturing, will review the “de minimis” exemption for imports of USD$800 or less. The purpose of this is to evaluate the impact of the exemption on tariff collection and on the entry of counterfeit products or illicit substances (such as drugs). As a result, it will recommend modifications that protect both public health and tax revenues.
The Secretary of the Treasury, in coordination with the Secretary of Commerce and the United States Trade Representative, will investigate whether there are discriminatory or extraterritorial taxes applied to US companies or citizens by other countries and, if so, possible responses to these practices should be outlined.

I.3. “America First Policy Directive To The Secretary Of State”

Through the executive order “America First Policy Directive To The Secretary Of State” issued on January 20, 2025, President Donald Trump instructs the State Department to align its policies, programs, personnel, and operations with a foreign policy strategy that prioritizes the national interests of the United States and its citizens, ensuring that all diplomatic and related actions are oriented toward this objective. The Secretary of State is hereby directed to issue, as soon as possible, the guidelines necessary to implement this orientation in all areas of the Department.

I.4 Immigration policy and the fight against fentanyl

The Donald Trump administration has indicated that one of its guiding principles will be to strengthen immigration policy (by reinforcing border security and tightening immigration laws), as well as to fight the trafficking of fentanyl. In his new administration, Trump has established that in order to achieve his immigration and illicit drug enforcement objectives, he will retaliate in trade matters, such as increasing tariffs.

On January 20, 2025, as one of its first measures, the CBP One application¹, previously used to schedule immigration appointments, was suspended, resulting in the cancellation of existing appointments and restricting migrants’ access to the US immigration system. That same day, the administration declared a national emergency on the southern border, which allowed for the mobilization of additional resources and the implementation of stricter measures to restrain illegal immigration.

In addition, an executive order instructed the Department of State to designate Mexican cartels and other foreign criminal organizations as terrorist organizations. This measure seeks to block their assets and dismantle their financial networks. Likewise, construction of the border wall resumed, continuing the Donald Trump administration’s previous efforts to tighten security on the border with Mexico.

In parallel, mass deportation operations were launched, with the US Immigration and Customs Enforcement setting a target of between 1,200 and 1,500 arrests per day. These operations initially focused on sanctuary cities and individuals with criminal records. In addition, refugee processing was suspended for a period of four months and parole status was revoked for migrants who had entered the country under previous humanitarian programs.

Another relevant action was the attempt to eliminate birthright citizenship. Through an executive order, the administration attempted to end the right to citizenship guaranteed by the Fourteenth Amendment to the United States Constitution. However, on January 23, 2025, this measure was blocked by a federal judge, who declared it “clearly unconstitutional.”

Finally, on January 29, 2025, President Trump signed the Laken Riley Act, which gives immigration authorities the power to detain immigrants who have committed minor crimes. In addition, this law authorizes states to sue the federal government for non-compliance with immigration legislation.

II. Violations by the United States of its international commitments

The increase in tariffs on Mexican products by the United States and various aspects of the executive orders and actions implemented by the United States as of January 20, 2025, could violate several trade agreements signed by that country, including:

The General Agreement on Tariffs and Trade (GATT 1994),
The Understanding on Rules and Procedures Governing the Settlement of Disputes,
The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement),
The Agreement on Subsidies and Countervailing Measures,
The World Trade Organization Agreement on Government Procurement.

Additionally, at the regional level, they could violate various chapters of the USMCA and other regional agreements of the United States.

In addition, the measures on migration and the fight against fentanyl could violate various commitments made by the United States under public international law, including the international human rights regime and humanitarian law.

III. Mexico’s response to the US tariff increase and measures taken to strengthen its economy.

III.1. Response of the Mexican Government to the implementation of the 25% additional tariffs

On February 1st, 2025, the President of Mexico, Claudia Sheinbaum, responded to the announcement of an additional 25% increase in tariffs imposed by the United States on Mexican products. In response to the possibility of trade restrictions imposed by the United States, Mexico has decided to act firmly in defense of its economic interests. The Mexican President has instructed the Ministry of Economy to implement “Plan B,” which includes tariff and non-tariff measures to protect Mexican industry from possible effects derived from Washington’s unilateral decisions, although the details of the Plan B have not been made public yet.

Likewise, Sheinbaum pointed out that the imposition of tariffs was not the right way to solve bilateral differences and that the use of protectionist measures would affect the economic stability of both nations, and therefore invited President Trump to engage in dialogue. Finally, she categorically rejected the accusations made by the US government linking the Mexican government to criminal organizations.

On the other hand, in parallel to the various measures adopted by the Trump Administration, Mexico has implemented a series of concrete actions with the aim of strengthening the national economy, integrating Mexico into the USMCA region, improving its tax collection, incentivizing national production and prioritizing national content. The main initiatives implemented by the Mexican Government are analyzed below.

III.2. “Mexico’s Plan”: National Strategy for Industrialization and Shared Prosperity.

On January 13, 2025, President Claudia Sheinbaum, announced the launch of the “Mexico’s Plan” which seeks to achieve certain objectives by 2030: (i) strengthen national productive capacity (through investment of 277 billion dollars), (ii) attract foreign investment, (iii) strengthen integration into the value chains of the USMCA region, (iv) reduce dependence on Asian imports, (v) boost domestic consumption and production, (vi) generate employment in strategic sectors such as manufacturing and technology, and (vii) encourage an increase in the national content of industrial production, promoting the use by more companies of inputs and components manufactured in Mexico.

The Mexico’s Plan expects to create 1.5 million new jobs, mainly in the manufacturing and technology sectors.

In tax terms, the Mexico’s Plan has designed a scheme of subsidies and incentives to boost innovation and industrial development. Up to 30 billion pesos will be allocated until 2030 in tax incentives for companies that invest in technology and strategic sectors, with special attention to small and medium-sized companies.

In terms of support for national production, the government has announced the creation of 35,000 jobs in as the manufacturing, construction and mining sectors for Mexicans repatriated from the United States, ensuring their incorporation into the social security system and welfare programs. In addition, manufacturing in key sectors such as textiles, semiconductor manufacturing and the electric cars will be strengthened.

To guarantee the plan’s success, 150,000 professionals and technicians will be trained each year and access to financing for small and medium-sized companies will be facilitated. As part of the objective of strengthening the national value chain, the aim is to increase the local content in the production of strategic goods by 15%.

II.3 Customs modernization and digitization of procedures

The Mexico’s Plan includes customs modernization, including the modernization of the customs offices in Veracruz and Coatzacoalcos and the creation of the new National Law to Eliminate Bureaucratic Formalities and Corruption, which will enable the digitization of government procedures and the use of artificial intelligence in the inspection of goods. One of the main axes of this initiative is the digitization of customs procedures, with the goal of automating 80% of government processes related to import and export. This is expected to reduce waiting times by up to 50%, facilitating trade flow and reducing operating costs.

The plan incorporates the use of artificial intelligence for the inspection of goods. Through automatic learning systems, the technology will allow for a more efficient and precise analysis of products entering and leaving the country. This will speed up cargo inspection and significantly reduce processing times, avoiding unnecessary delays in customs procedures. Another key aspect of this modernization is its impact on the fight against corruption, by reducing human intervention in decision-making and making procedures more transparent. This will strengthen security and confidence in Mexican foreign trade, facilitating operations for importers and exporters. To guarantee the implementation of this modernization, the government has proposed a constitutional reform that will be sent to Congress in order to support the digital transformation process.

In addition, the Mexico’s National Customs Agency has implemented specific measures to streamline commercial operations.² Furthermore, a goal has been set to reduce intrusive customs inspections to less than 10%, thus reducing the delays and costs associated with the inspection of goods.

At the same time, collaboration between the Health Regulation Agency and the Federal Commission for the Protection Against Sanitary Risks has been strengthened to simplify and speed up the sanitary authorization processes for imported and exported products. This alliance seeks to guarantee that goods compliance with safety and quality standards, while avoiding unnecessary delays in their commercialization.

Also, between February 24 and 28, 2025, the IMMEX 4.0 Program will be implemented, with the purpose of modernizing the export manufacturing industry in Mexico through the following actions:

Digitalization of processes: Implementation of digital systems to optimize the supply chain, improve product traceability and facilitate inventory management.
Industrial automation: Adoption of automation technologies in production lines to increase operational efficiency and reduce human error.
Systems integration: Consolidation of technological platforms that enable real-time communication between different areas of the company, improving decision-making and internal coordination.
Advanced data analysis: Use of big data analysis tools to identify trends, optimize processes and anticipate market demands.
Value Added Tax (“VAT”) and Special Tax on Production and Services (“IEPS” for its acronym in Spanish) Certification: Integration of the VAT and IEPS certification process with the new Manufacturing for Export 4.0 scheme, simplifying tax and customs processes for participating companies.

With these measures, the government seeks to position Mexico as a more competitive country in the international trade arena, ensuring more efficient, modern and reliable processes in the customs sector.

III.4. The SAT’s “2025 Master Plan”: Foreign Trade Taxation and Collection

The 2025 Master Plan of the Tax Administration Service (“SAT”, for its acronym in Spanish), published by the SAT on January 8, 2025, establishes strategies to achieve a tax collection of 5.3 trillion pesos without creating new taxes or increasing existing ones. The key to this plan lies in the intensive use of technology for the inspection and monitoring of operations and it will have a special focus on international trade and customs compliance.

One of the central axes of the 2025 Master Plan is the control against evasion and smuggling, through the implementation of operations to combat smuggling and an in-depth control of international trade operations.

In this regard, strict measures will be implemented such as the monitoring of litigation in federal courts in all matters related to tax fraud, smuggling and the issuance of false invoices, intensification of inspection actions in high-risk economic sectors and operations to combat smuggling and in-depth inspection of international trade operations, to avoid: (i) abuses of IEPS and VAT certifications; (ii) inappropriate application of the 0% VAT rate; (iii) non-return of temporary imports; (iv) incorrect customs valuation; (v) abuses in the introduction of goods with preferential tariff treatment; (vi) inappropriate use of benefits provided for in free trade agreements; (vii) omission of VAT withholding for foreigners without a permanent establishment; (viii) failure to present import permits; (ix) incorrect tariff classification; and (x) incorrect declaration of data in customs declarations.

To achieve this, the SAT will apply advanced technological tools for the detection of anomalies, the automation of processes in companies will be promoted; the use of technological tools for the fulfillment of programs such as the Manufacturing, Maquiladora and Export Services Industry Program (“IMMEX”, for its acronym in Spanish), ensuring the correct connection with the authorities, will be enhanced; the SAT will segment importers using techniques of grouping importers according to their behavior pattern, which will facilitate the identification of risk patterns. In addition, time series analysis will make it possible to anticipate irregularities and evaluate trends in imports and exports, complemented by studies of the correlation between trade volumes and tax returns. The authority will also pay special attention to the detection of false invoicing and tax fraud schemes within international trade.

The 2025 Master Plan establishes a more rigorous international trade control, which will force companies to strengthen their internal processes in order to ensure compliance with customs and tax regulations and avoid risks and sanctions.

Companies must strengthen their international trade compliance processes, ensuring correct tariff classification, customs declarations and application of benefits under free trade agreements. It is also crucial to adopt advanced technologies for the automation of regulatory compliance and the detection of risks in customs operations.

More aggressive oversight is expected, so it is recommended to keep documentary and operational information in order to respond to audits and reviews. The 2025 Master Plan represents a year of intensified extra-enforcement, particularly for large taxpayers and foreign trade operations.

IV. Analysis of the Trade Outlook for Mexico in 2025

In 2025, North America’s international trade faces a critical moment. While the United States reinforces its protectionist policy with the imposition of tariffs and puts pressure on Mexico with unilateral measures, Mexico is committed to strengthening its productive capacity and promoting foreign investment as a long-term strategy.

Currently, we are at a defining moment in terms of the direction that the bilateral relationship between Mexico and the United States will take. The additional tariffs announced by the United States changed the course of the USMCA renegotiation in 2026. Although Mexico has always been committed to strengthening its integration into the USMCA region, the course of US foreign policy could represent an abrupt change of strategy for Mexico in the coming months, which could include objectives of closer integration with other regions of the world.

The success of the Mexico’s Plan and the Master Plan will depend to a large extent on the cooperation achieved with strategic commercial partners and on Mexico’s capacity to maintain its competitiveness in the international market. Diversification of markets, strengthening of the manufacturing sector and the promotion of strategic alliances with other countries could help Mexico to mitigate the impact of tariffs and guarantee long-term economic stability. However, the risks associated with the US trade policy will continue to pose a challenge that will require a strategic and coordinated response from Mexico and its trading partners.

The SMPS International Trade team is at your service to answer specific questions. If you have any comments on this publication or any questions, please let us know. We will be happy to assist you.

¹ CBP One is a free mobile application that provides access to services of the United States Customs and Border Protection (CBP).
² One of them is the authorization of imports of products such as soda and potash through places other than those previously authorized, which makes the entry of these inputs into the country more flexible and easier.