{"id":304136,"date":"2025-07-30T14:37:13","date_gmt":"2025-07-30T14:37:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/304136\/"},"modified":"2025-07-30T14:37:13","modified_gmt":"2025-07-30T14:37:13","slug":"tariffs-and-judicial-chaos-shake-investor-confidence-in-mexico-everything-has-been-put-on-hold-trump-tariffs","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/304136\/","title":{"rendered":"Tariffs and judicial chaos shake investor confidence in Mexico: \u2018Everything has been put on hold\u2019 | Trump tariffs"},"content":{"rendered":"

A growing wave of uncertainty is freezing investment plans in Mexico<\/a>, the US\u2019s largest trading partner, rattling domestic and foreign business leaders alike.<\/p>\n

Investors are weighing Donald Trump\u2019s<\/a> decision to impose tariffs<\/a> on 1 August. The plan so far \u2013 levies on Mexican-made cars, steel, aluminum, metal parts and tomatoes. And they are pondering the push by the Mexican president, Claudia Sheinbaum<\/a>, to overhaul the country\u2019s judiciary in ways critics say undermine legal certainty and could roll back democratic gains.<\/p>\n

No wonder they are increasingly unsure how to proceed. Plans to launch new operations in Mexico<\/a> \u2013 or expand existing ones \u2013 are being reconsidered, postponed or quietly shelved.<\/p>\n

The economic effects increasingly rattle trade and investment decisions all along the US-Mexico border, gnawing at executives\u2019 confidence and potential job growth. Long-term planning proves all but impossible, say business leaders and economic experts.<\/p>\n

\u201cForeign investment is probably lower than it otherwise would have been at this point in the year,\u201d said Tom Fullerton, an economics and finance professor at the University of Texas at El Paso. \u201cIt is still not clear whether the Trump administration is going to allow the USA to remain in USMCA [United States-Mexico-Canada Agreement, the free trade agreement negotiated under Trump\u2019s first presidency].\u201d<\/p>\n

\u201cIt is also not clear how the judicial landscape will change within Mexico.\u201d<\/p>\n

With many US and Mexican businesses closely linked, the effects of the policy changes echo across the borderlands. US-Mexico bilateral trade reached an estimated $840bn in 2024.<\/p>\n

Already, about 65,000 jobs have been lost in Ju\u00e1rez alone, due to a myriad of factors, including increased factory automation, said Jerry Pacheco, president and CEO of the Border Industrial Association.<\/p>\n

\u201cWe\u2019ve lost at least three deals since the steel and aluminum tariffs went up to 50% in Santa Teresa, so it creates an uncertain business environment,\u201d Pacheco said. \u201cThe US and Mexico economies are so intertwined and depend on each other that if US companies are suffering because of steel and aluminum tariffs, Mexico is gonna suffer also.\u201d<\/p>\n

The paralyzed decision-making threatens to weigh heavily on Mexico\u2019s growth prospects \u2013 and on Sheinbaum\u2019s legacy as the country\u2019s first female president. The economy has already shown unmistakable signs of a sharp slowdown since late last year.<\/p>\n

No clear rebound is in sight here on the border or beyond.<\/p>\n

\u201cEverything has been put on hold,\u201d said V\u00edctor Gonz\u00e1lez, owner of Solinda, a precision machine-manufacturing company based in the central Mexican state of Aguascalientes, referring to what he hears from colleagues and business associations. \u201cOne of the reasons is the reform of the judicial system. The other is tariffs.\u201d<\/p>\n

Initially, Trump\u2019s sweeping threats to slap tariffs on all Mexican and Canadian imports forced business owners to recalibrate their south-of-the-border investment strategies. The renewed economic boom Mexico was expected to enjoy \u2013 fueled by Trump\u2019s hardline stance on Chinese imports \u2013 quickly fizzled.<\/p>\n

Rather than benefit from global supply chain shifts, both Mexico and Canada have found themselves caught in the trade-fueled crossfire. Rather than encouraging near-shoring, Trump decided to use tariffs as leverage to pressure both neighbors to crack down on the flow of migrants and drugs, particularly fentanyl.<\/p>\n

An indication of possible impacts could be General Motors\u2019 June announcement of a $4bn investment in US factories in Michigan, Kansas and Tennessee. That fits the company\u2019s strategy to revive its US manufacturing footprint, which Trump has demanded.<\/p>\n

GM revealed that the Blazer and Equinox, sport utility vehicles that for years have been assembled in Mexico, will be built at plants in Tennessee and Kansas starting in 2027.<\/p>\n

GM has made vehicles in Mexico since the 1930s and its expanded production here was touted as an early victor for the free trade agreement between the US, Mexico and Canada in the early 1990s.<\/p>\n

The automaker\u2019s move was hailed by the Trump administration as a major victory.<\/p>\n

\u201cNo president has taken a stronger interest in reviving America\u2019s once-great auto industry than President Trump,\u201d the White House spokesperson Kush Desai said in a statement.<\/p>\n

The US administration\u2019s message was clear to many observers \u2013 Mexico\u2019s loss is the US\u2019s gain, even if GM must shoulder higher production costs and it could lead to higher prices for consumers.<\/p>\n

Though threats eased as the year has proceeded \u2013 after Canada and Mexico announced border taskforces and deployed more security personnel \u2013 investor confidence has been shaken.<\/p>\n

Now, Sheinbaum has realized her predecessor\u2019s dream of radically reshaping Mexico\u2019s judiciary, to the benefit of their all but hegemonic Morena political party. A scarcely attended election in June \u2013 turnout was just 11% \u2013 replaced career judges, magistrates and supreme court justices with those chosen by popular vote.<\/p>\n

Many fear that consolidating control over the courts will erode institutional checks and balances. With judgeships and other judicial posts dominated by ruling party loyalists, arbitrary or ideologically driven rulings may flourish, critics fear. All nine newly elected supreme court justices have ties to Sheinbaum, former president Andr\u00e9s Manuel L\u00f3pez Obrador, or their left-leaning party.<\/p>\n

\u201cWhat investors are looking for is certainty and rule of law,\u201d said Tony Garza, US ambassador to Mexico under the George W Bush administration who now works on trade and other issues at White and Case, a law firm. \u201cWhat they\u2019re getting with tariff threats and judicial elections is chaos and incompetence.\u201d<\/p>\n

Many business leaders, economists and credit-rating agencies fear the country is veering back toward the one-party rule that dominated Mexican politics for most of the 20th century. Mexican politics have been stumbling along since democracy was introduced in 2000.<\/p>\n

The judicial reform could \u201cnegatively affect the investment appetite and business environment\u201d, Fitch Ratings warned in a report last year. That echoed similar concerns voiced by S&P Global and Moody\u2019s, the world\u2019s other two largest credit-rating agencies.<\/p>\n

The economic headwinds are already building, with trouble signs on the border. Fullerton said unemployment rose from 2.2% in 2022 to 3.3% in 2024.<\/p>\n

Across Mexico, with an annualized 2.7% economic contraction in the final quarter of 2024 and tepid 0.8% growth in this past winter, labor and public sentiment indicators also paint a troubling picture.<\/p>\n

The private sector added little more than 85,000 new jobs between January and June \u2013 or more than two-thirds fewer than in the same period last year. That\u2019s the lowest job creation since 2009, not counting the effects of the Covid pandemic, according to the Mexican social security institute.<\/p>\n

Consumer sentiment in June fell to a two-year low, while business confidence fell for the 14th month in a row said recently the National Institute of Statistics and Geography (Inegi).<\/p>\n

While overall foreign direct investment (FDI) remains positive, the inflow of new capital has all but stalled. Of the $21.3bn in FDI Mexico received in the first quarter of 2025, just $1.58bn \u2013 or 7.4% \u2013 represented fresh investment projects.<\/p>\n

\u201cThe truth is, the way things are going \u2013 and with recent events like the judicial reform \u2013 many are saying this isn\u2019t going to be good,\u201d added Gonz\u00e1lez, the factory owner. \u201cThat\u2019s more or less the feeling everywhere. Right now, it\u2019s a perception, not yet a reality.\u201d<\/p>\n

That new foreign investment is well below the six-year average of 29% recorded during L\u00f3pez Obrador\u2019s administration, and it pales in comparison with the nearly 60% share of new capital the country registered at the beginning of this century.<\/p>\n

At a recent meeting with business and political leaders from the Texas Lyceum, a non-profit, non-partisan statewide leadership organization, the newly arrived US ambassador, Ron Johnson, was put on the spot with the following question: What is the \u201cpurpose\u201d of Trump\u2019s tariffs? After a long pause, Johnson responded, Trump \u201cis a businessman\u201d, he said.<\/p>\n

Just in the state of Texas, Mexican trade totaled $540bn in 2024.<\/p>\n

\u201cI sincerely believe \u2026 he just wants things to be fair, reciprocal,\u201d said Johnson, who said he was a \u201cgood friend\u201d of the president. \u201cHe wants competition to exist on a level playing field.\u201d<\/p>\n

Amid an awkward silence the moderator stepped in to thank the ambassador. Polite applause followed.<\/p>\n

This story was co-published with Puente News Collaborative<\/a>, a bilingual non-profit newsroom, convener and funder dedicated to high-quality, fact-based news and information from the US-Mexico border.<\/p>\n","protected":false},"excerpt":{"rendered":"A growing wave of uncertainty is freezing investment plans in Mexico, the US\u2019s largest trading partner, rattling domestic…\n","protected":false},"author":2,"featured_media":304137,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5311],"tags":[49,978,659],"class_list":{"0":"post-304136","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-states","8":"tag-united-states","9":"tag-us","10":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114942695596147915","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/304136","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=304136"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/304136\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/304137"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=304136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=304136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=304136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}