Global Macro Research
Politics

Mexico will face challenges during Trump’s second term

The re-election of Donald Trump as US president will put pressure on Mexico’s new president, Claudia Sheinbaum, to maintain favourable cross-border ties. But, despite threats of punitive economic policy from Washington, Mexico should still benefit from ‘nearshoring’ over the long term as a key partner of the US.

Author
Emerging Markets Economic Analyst

Duration: 1 Min

Date: 18 Dec 2024

Key Takeaways

  • 2025 will be a major transitional year for Mexico, with new presidents settling in on both sides of the US border.
  • Mexico’s large trade surplus with the US places it among the countries most at risk of punitive action from Donald Trump’s administration.
  • Tariff threats will be mainly used to pressure Mexico to address border security and migration. Ultimately, US dependence on Mexican inputs should disincentivise major trade restrictions, but uncertainty about the US-Mexican relationship could linger throughout 2025.
  •  US plans for mass deportations of undocumented immigrants pose downside risks for Mexico’s remittances, though losses may be limited by US economic resilience. 
  • However, Mexico’s integration of deported workers and its attempts to satisfy Trump’s demands at the border will present logistical and fiscal obstacles. 
  • The implementation of the broader reform agenda that President Claudia Sheinbaum inherited from her predecessor, Andrés Manuel López Obrador, will keep the country’s institutions under investor scrutiny. 

    Read the full article. 

Related articles

View all articles