2025, a decisive year for the reconfiguration of bilateral trade between Mexico and the US

With the arrival of Donald Trump to the presidency of the United States, the bilateral relationship with Mexico is once again entering a period of uncertainty. Trade, migration and security factors will play a key role in the dynamics between the two countries. Although there are significant risks, opportunities may also arise to strengthen cooperation and investment.

One of the main risks for the North American region will be the impact that uncertainty about the trade relationship could have on investment. The possibility of new tariffs and the review of the United States-Mexico-Canada Agreement (USMCA) in 2026 could generate a “ wait and see ” position among investors.

In this regard, it is important to recap the tariffs and executive orders announced by Trump since the beginning of his term that could affect Mexico. Currently, we are in a pause period, valid until March 4, in the threat of a 25 percent tariff on all imports from Mexico and Canada. At the same time, an executive order remains in effect that would impose a 25 percent tariff on steel and aluminum imports from all countries starting March 12.

Additionally, on his first day in office, Trump issued the “ America First Trade Policy ” memorandum, ordering a review of 23 key issues by April 1, 2025. These include issues that could impact the trade relationship, such as the review of the USMCA and U.S. participation in the treaty, trade with China, U.S. companies’ access to government contracts, and the effects of illegal migration and fentanyl trafficking.

Since none of these measures have been implemented immediately, there is room for negotiation and lobbying. Trump's strategy of using tariffs as a negotiating tool is bearing out, and most analysts consider it unlikely that he will implement measures that would significantly harm the US economy and negatively impact price dynamics in that country.

According to Eurasia estimates, there is a 65 percent chance that Mexico and Canada will be able to avoid tariff threats, a 25 percent chance that tariffs will be applied with temporary modifications, and only a 10 percent chance that tariffs will be fully implemented. Specifically for Mexico, it is possible that Trump will continue to use tariff threats as a strategy to apply pressure on issues such as migration, security, and Chinese investment in the country.

One of the most relevant aspects in the future of the bilateral relationship is the review of the USMCA scheduled for mid-next year. This process seeks to extend the treaty until 2042. However, if consensus is not reached, it will continue until its original expiration in 2036, with annual reviews. One possible scenario, although unlikely, is that the US decides not to renew it next year and uses annual reviews to impose conditions. However, given the relevance of the treaty for trade in North America, its long-term continuity seems assured.

The new Trump administration brings with it uncertainty and challenges for Mexico. Trade and migration risks are significant, but there are also opportunities to strengthen the bilateral relationship. In a context where the United States seeks to reconfigure its foreign trade, the USMCA becomes more valuable, while Mexico's geographic, demographic and cost position remains a competitive advantage. Mexico's willingness to negotiate and adapt to the conditions imposed will be key to mitigating the risks and taking advantage of the opportunities that may arise in this complex scenario.