MEXICO CITY (AP) — Mexico has avoided the latest round of tariffs imposed by the United States on various global trading partners. The announcement, which came Thursday, was seen as a positive development for the Mexican economy. However, the country remains mindful of the broader economic challenges posed by global uncertainty.
President Claudia Sheinbaum attributed Mexico’s exemption to the free-trade agreement signed between Mexico, Canada, and the U.S. during former President Donald Trump’s administration, which continues to provide Mexico with trade protections.
Sheinbaum’s government now turns its attention to addressing the 25% U.S. tariffs on imported automobiles, steel, and aluminum. In response, the administration plans to boost domestic production in these sectors to protect jobs and reduce reliance on imports.
Economy Secretary Marcelo Ebrard highlighted that, despite Mexico’s favorable position under the trade agreement, other nations were still targeted by U.S. tariffs announced on “Liberation Day.” Ebrard explained that these measures are part of a broader effort by the U.S. to revitalize its manufacturing sector. Nevertheless, Mexico’s agricultural exports, including avocados, clothing, and electronics, will continue to enter the U.S. duty-free.
While the free-trade agreement remains intact for now, Ebrard cautioned that the evolving trade landscape, especially one driven by tariffs, may challenge the long-term viability of such agreements. The current stability, however, provides Mexico with a competitive advantage, as production costs remain lower in the country compared to other regions.
Economic analysts, such as Oscar Ocampo from the Mexican Institute for Competitiveness, noted that the U.S. is increasingly turning inward, but its relatively less restrictive approach toward Mexico presents an opportunity for growth in the country.
To capitalize on this opportunity, President Sheinbaum’s government is encouraging Mexican companies, including those that have not been involved in exports under the trade agreement, to qualify for trade benefits. Sheinbaum mentioned that major German automakers could be an example of companies seeking to align their operations with the free-trade agreement’s requirements.
However, despite Mexico’s success in avoiding the latest round of tariffs, the uncertainty surrounding global trade has already affected the country. Stellantis, the multinational automaker, announced a temporary suspension of production at its plant in Toluca, Mexico, for the month of April due to the ongoing trade uncertainty. The company has more than 15,000 employees in Mexico, and similar production halts have been planned in the U.S. and Canada, affecting hundreds of workers.
In response to the economic challenges, Sheinbaum has introduced “Plan Mexico,” an initiative aimed at fostering domestic production. One notable example of this effort is the collaboration between the government, universities, and local companies such as Megaflux and Dina to manufacture electric buses for public transportation. These buses, branded Taruk, are set to contribute to Mexico’s industrial development, with about 70% of their components being sourced domestically, though the lithium batteries are imported from China.
The initiative aims to strengthen Mexico’s industrial capabilities, with the large domestic market offering significant advantages for the development and resilience of the sector. Despite the global economic headwinds, the project is seen as a strategic move to safeguard Mexico’s economic future.
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