Ranging from 17% to 19%, the tariffs entered into force the same day a new rule took effect requiring foreign e-commerce companies to pay Mexico’s 16% value-added tax (IVA) on products they export to and sell in Mexico.

Federal tax agency SAT said in a statement that the tariffs were being implemented to “continue strengthening the fight against abusive practices” of foreign companies that import products to Mexico.

SAT also said that surveillance of goods entering Mexico from Asia will be strengthened, which could lengthen delivery times.

Outlined in the General Rules of Foreign Trade for 2025 document that was published in the federal government’s official gazette earlier this week, the tariffs are as follows:

• All products imported via e-commerce sites and courier companies from countries with which Mexico doesn’t have a trade agreement are subject to a uniform 19% tariff. Mexico doesn’t have a trade pact with China, where Temu, Shein, AliExpress and other e-commerce companies are based.
• A 19% tariff also applies to goods valued at more than US $1 that are imported via e-commerce sites and courier companies from countries with which Mexico does have a trade agreement, with a couple major exceptions: Goods imported from the United States and Canada are exempt.
• Products entering Mexico via e-commerce sites and courier companies from the United States and Canada are subject to a 17% tariff if their value is greater than US $50 but doesn’t exceed $117. Goods from the U.S. and Canada — Mexico’s USMCA trade partners — are not subject to any tariff if their value doesn’t exceed $50.
• Products entering Mexico via e-commerce sites and courier companies from the United States and Canada are subject to a 19% tariff if their value is between US $118 and $2,500.

Previously, countries were not required to pay duties on goods of those values, according to a SAT spokesperson quoted by the Reuters news agency.

Media organization Merca 2.0 noted that “a decorative LED desk lamp purchased on Amazon and shipped [to Mexico] from China with a base price of $700 MXN would incur a 19% tariff equivalent to $133 MXN, bringing the cost to $833 MXN.”

The price of the lamp would be even higher if Amazon passed on the 16% IVA to the customer.

The implementation of the new tariffs and introduction of the new IVA rule come as Mexico is seeking to reduce its reliance on imports from China and other Asian countries. Chinese e-commerce sites (and brick-and-mortar stores in Mexico) sell a wide range of Chinese goods at prices that are significantly lower than those made in Mexico, raising concerns about the ongoing viability of various Mexican industries.

Last month, the federal government announced new tariffs on clothes and textiles imported from countries with which Mexico doesn’t have a free trade agreement. The stated aim was to protect the Mexican textile/clothing industry, which the Mexican government says is losing jobs due to, in large part, unfair competition from underpriced Chinese imports.

The El País newspaper reported that the objective of the 35% tariffs on imported clothes and textiles is to “kill three birds with one stone”: to encourage production in the Mexican textile industry; to increase tax collection in a country that has one of the lowest collection rates in the OECD; and to send a “conciliatory message” to the incoming U.S. government led by Donald Trump.

Mexican authorities have also raided stores in Mexico to seize counterfeit Chinese goods as well as products for which applicable import fees were not paid.

Obliging foreign e-commerce companies to pay IVA and tariffs on products they import to Mexico will create a more level playing field between foreign and Mexican businesses — and thus should make locally made goods more competitive.

With reports from Reuters, El País and Merca 2.0 

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The World Bank is projecting 2.6% growth for the Latin America and the Caribbean region (the lowest growth rate among all global regions, it says), while the U.N. commission known as Cepal predicts a growth rate of 2.4% for the region.

However, the World Bank sees Mexico growing by 1.5% in 2025, and Cepal — the Economic Commission for Latin America and the Caribbean — pegs Mexico’s growth rate at a mere 1.2%. In both instances, Mexico’s projected growth rate is the third-lowest among all regional nations, surpassing only Haiti and Cuba.

Additionally, a survey released last month by Mexico’s own central bank (Banxico) revealed that local analysts are more in line with Cepal’s prediction, lowering the country’s growth forecast for 2025 from 1.20% to 1.12%. 

In an October report in which it lowered its 2024–2026 economic growth forecasts for Mexico, the World Bank cited uncertainty for investors among the reasons for its more pessimistic outlook.

One reason for its pessimism, a Bank official said, is that Mexico is not fully taking advantage of the nearshoring trend.

Mark Thomas, World Bank country director for Mexico, Colombia and Venezuela, said that multinational companies that have relocated to Mexico amid the nearshoring trend only generate around 0.2% of Mexico’s gross domestic product

Thomas cited water availability, energy supply and the cost of land as concerns, adding that insecurity, government policies and constitutional reforms — especially a controversial judicial reform — are also major issues.

The Banxico survey suggests analysts aren’t confident these issues will be addressed in a timely manner: 77% of those surveyed expect Mexico’s business climate to “get worse,” and 59% of respondents said it was a “bad time” to invest in Mexico.

As for Cepal, its year-end report to the United Nations says Latin America and the Caribbean face a complex panorama in the coming years.

“[T]he region’s economies will stay mired in a trap of low capacity for growth, with growth rates that will remain low and a growth dynamic that depends more on private consumption, and less on investment.”

José Manuel Salazar-Xirinachs, Cepal’s executive secretary, said that Mexico is particularly vulnerable because of Donald Trump’s threats to impose tariffs on Mexican imports to the U.S. once he is sworn in as U.S. president on Jan. 20.

Mexico sends 84% of its exports to the United States, and there is a high level of supply chain integration between the two neighbors. 

“If Trump were to implement just a 10% tariff … exports and investments would be impacted, and we’d see Mexico’s GDP reduced by 0.8% to 1%,” he said.

With reports from El Economista and the World Bank

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The requirement is outlined in the Resolución Miscelánea Fiscal 2025 (2025 Miscellaneous Tax Resolution), which Mexico’s Finance Ministry published in the federal government’s official gazette on Monday.

In accordance with the new rule, digital platforms including Amazon and the Chinese companies Temu, Shein and Alibaba will have to pay the IVA to federal tax agency SAT even when payment for products is deposited into foreign accounts. IVA payments must be made on a monthly basis before the 17th of any given month.

E-commerce companies are now also obliged to enroll in Mexico’s Federal Taxpayer Registry as part of efforts to ensure they comply with all relevant tax obligations in the country.

To avoid falling afoul of tax laws in Mexico, such companies will have to collect a range of information including bank account details and location from all third parties selling products on their sites. In addition, foreign e-commerce companies will have to provide electronic receipts to third parties that detail tax payments that have been withheld.

The stricter tax rules come as Mexico is seeking to reduce its reliance on imports from China and other Asian countries. Chinese e-commerce sites (and brick-and-mortar stores in Mexico) sell a wide range of Chinese goods at prices that are significantly lower than those made in Mexico, raising concerns about the ongoing viability of various Mexican industries.

Earlier this month, the federal government announced new tariffs on imported clothes and textiles in order to protect the Mexican textile/clothing industry, which the Mexican government says is losing jobs due to, in large part, unfair competition from underpriced Chinese imports. Mexican authorities have also raided stores in Mexico to seize counterfeit Chinese goods as well as products for which applicable import fees were not paid.

Obliging foreign e-commerce companies to pay IVA on products they sell in Mexico will create a more level playing field between foreign and Mexican businesses — and thus should make locally made goods more competitive.

In 2025, the government expects to collect an additional 15 billion pesos (US $719.2 million) in tax revenue as a result of e-commerce companies’ payment of the IVA.

Who will really end up paying?

According to media reports, there are concerns that e-commerce companies — whose sales in Mexico are on the rise — will pass on the new tax burden to their customers, even though it’s the companies’ obligation to pay the IVA.

“Although the 16% IVA is solely directed at digital platforms, concerns remain as to how the indirect transfer of this tax to the final consumer will be avoided,” reported the news website Debate.

“While the authorities have said that the 16% IVA will only be charged to the e-commerce platforms and not to customers, there are still doubts about how to prevent final consumers from paying it,” the newspaper El Economista said.

With reports from Debate, El Economista and Infobae

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Coupled with the prospect of tariffs being slapped on exports to the U.S. under President-elect Donald Trump, tequila’s glory days in the United States seem to be in peril.

“The tequila industry is set for a very turbulent 2025,” Trevor Stirling, an analyst with the financial management firm Bernstein, told FT.

“Much more new spirit is being distilled than is being sold, and inventories are starting to accumulate,” he added.

Half a billion liters of surplus tequila in storage

According to FT, Mexico was sitting on more 525 million liters of tequila in inventory at the end of 2023.

Also, about one-sixth of the 599 million liters of tequila produced last year remained in inventory — according to figures shared with FT by the Tequila Regulatory Council (CRT) — although some of that is being aged in barrels rather than waiting to be bottled or sold.

U.S. consumers’ thirst for tequila has grown rapidly over the past decade, in part due to a host of celebrity-backed brands such as comedian Kevin Hart’s Gran Coramino, model-influencer Kendall Jenner’s 818 Tequila and actor George Clooney’s Casamigos.

Another such brand, Santo — founded by celebrity chef Guy Fieri and rocker Sammy Hagar — was reportedly victimized by a heist in the U.S. last month that netted the thieves more than 24,000 bottles of the stuff.

Despite the robbery, demand for tequila in the United States has fallen over the past 18 months, with FT citing two reasons: a decline in the pandemic spirits boom and imbibers cutting back on their drinking due to higher prices.

FT wrote that sales of spirits in the U.S. shrank 3% during the first seven months of 2024, compared to the same period in 2023, based on data provided by IWSR, a leading analyst of the global alcoholic beverage industry.

IWSR, which originally stood for the International Wine and Spirits Record, noted that U.S. tequila consumption fell 1.1% during that span — well below its 4% rise in 2023 and 17% rise in 2021 at the height of the tequila surge, FT reported.

The volume of tequila exported from Mexico reached an apex of 418.9 million liters in 2022, marking the 13th straight year of growth.

Over that span, tequila exports from Mexico increased by 207% — and since 1995 the increase was a whopping 548%.

However, the export volume dipped to 401.4 liters last year, according to data from Statista.com, a 4.2% dropoff from 2022.

Tariffs threaten to deepen the tequila slump

Adding to the emerging tequila slump is Trump’s threat to hit Mexico, the U.S.’s biggest trading partner, with a 25% tariff on its goods.

“It would be shooting themselves in the foot because their consumers would have to pay much more,” said CRT president Ramón González.

FT noted that Mexico relies on the United States to buy 83% of its exports.

Two-thirds of all tequila produced in Mexico was exported in 2023, FT reported, with 80% of that going to the United States. The next two largest export markets were Germany and Spain, with about 2% each, according to FT.

Tequila is protected by a designation of origin. Like French champagne or Italian parmesan cheese, products using the name tequila can be produced only in regions officially recognized by the Guadalajara-based CRT: most of Jalisco and parts of Nayarit, Michoacán, Guanajuato and Tamaulipas.

In addition, tequila must be made of at least 51% blue Weber agave, with an added requirement for “agave tequila” (such as blanco or silver) that all sugars come from blue agave.

Citing research by Bernstein, FT noted that large tequila brands have been cutting prices for more than a year in response to weaker consumer demand.

Moreover, the price of agave has plummeted from about 30 pesos per kilo to between six and eight pesos (for suppliers with contracts), or as low as two pesos on the spot market, according to producers and farmers, FT wrote.

With reports from Financial Times and Reuters

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Foreign direct investment likely hit a record high in 2024, even as we continue to wait for the much-anticipated nearshoring boom to fully arrive.

At Mexico News Daily, we’ve closely followed business and economic developments this year, reporting on a wide range of data, scores of investment announcements and events that have crimped the economy and hurt investor confidence, such as the recently enacted judicial reform.

As 2024 draws to a close, here’s a look back at 10 of the biggest business and economy stories in Mexico this year. Many of the developments, events and issues outlined below had a significant impact on the economic situation in Mexico this year and, in several cases, will help shape the future the country will face in the years to come.

The rise and fall of the Mexican peso 

The Mexican peso has been on a rollercoaster ride this year — one with far more downs (depreciations) than ups (appreciations).

The year started off well for the peso, and by early April, it had reached 16.30 to the US dollar, its strongest position in almost nine years.

Then, on the first Sunday in June, Mexico held its general elections, made Claudia Sheinbaum as the country’s first female president and voted in favor of a federal Congress dominated by the ruling Morena party and its allies.

The peso — trading at 17 to the greenback just before the elections — didn’t take kindly to the results.

The currency began to depreciate immediately, and by ten days after the elections had plummeted to almost 19 to the dollar due to factors that included the likelihood of Morena approving a range of constitutional reforms that former president Andrés Manuel López Obrador submitted to Congress in February.

Congress has approved more than a dozen of those reforms.

A range of factors had the peso trending weaker during subsequent months, including Donald Trump’s victory in the Nov. 5 presidential election in the United States.

The peso flirted with a 21-to-the-dollar rate on Nov. 6 but has recovered somewhat since then. At the time of publication of this article it was trading at 20.22 to the greenback.

Elon Musk pauses Tesla’s gigafactory project 

When I sat down to plot out our “10 biggest business stories of 2023” article, I had no hesitation in including Tesla’s Mexico gigafactory announcement.

Elon Musk announced in March 2023 that the electric vehicle manufacturer would build a multibillion-dollar plant near Monterrey, Nuevo León, generating excitement across the country and especially in the northern border state governed by Tesla enthusiast and Governor Samuel García.

Almost two years later, one could reasonably expect that Tesla would have made significant progress with its gigafactory plans, right? Wrong.

Musk said in July that the gigafactory project in Nuevo León was “paused” because of the possibility that Donald Trump would impose tariffs on vehicles made in Mexico if he won the Nov. 5 presidential election in the United States.

And at that time, the Tesla CEO hadn’t yet openly cozied up to Trump, who has made several threats to impose tariffs on vehicles made in Mexico, even those manufactured by U.S. companies.

Economy Minister Marcelo Ebrard said last month that he would seek a meeting with Musk to discuss Tesla’s plans for Mexico, but at the time of publication of this article, there had been no reports of such a meeting taking place.

Will Tesla’s gigafactory project go ahead? Stay tuned in 2025.

Is Mexico’s nearshoring boom drawing nigh? Data suggests it is 

The nearshoring trend — the relocation of companies to Mexico to shorten their supply chains and take advantage of a range of favorable business conditions — continued to receive significant media attention in 2024.

A year ago we asked this question: “Is Mexico on the verge of a nearshoring boom?”

The question is equally valid today.

While there are conflicting opinions, hard data indicates that Mexico can indeed expect to reap the rewards of an oncoming nearshoring boom.

Foreign companies continued to make investment announcements in 2024, unveiling plans to invest around US $65 billion in projects in Mexico. That amount — based on investment announcements made in the first nine months of the year — is on top of more than $110 billion in pledged investment last year.

If the majority of the announced projects actually go ahead — of which there is no certainty (see Tesla example above) — Mexico can indeed expect a nearshoring boom in coming years.

MND CEO Travis Bembenek looked at some of the other key nearshoring data in a recent column before opining that “we are still in the early innings of what will be a significant nearshoring opportunity for both Mexico and North America as a whole for years to come.”

Nearshoring to Mexico was a big story in 2024, but it could (or should) be an even bigger one in 2025, 2026 and beyond.

Major foreign companies announce Mexico projects 

As noted above, foreign companies continued to announce plans to invest in Mexico this year, suggesting that a nearshoring boom is on the horizon.

Among the major companies that announced projects were:

• Taiwanese electronics manufacturer Foxconn, which said in October that it would build a huge factory in Guadalajara, Jalisco, where it will assemble “superchips” for U.S. technology company Nvidia. (Planned investment amount not disclosed)
• Houston-based company Mexico Pacific Limited, which in June announced an additional investment of US $15 billion in liquefied natural gas projects in northern Mexico.
• Amazon Web Services, which said in February that it intends to invest more than US $5 billion in a cluster of data centers in Querétaro.
• Swedish automaker Volvo, which announced in August that it had selected the state of Nuevo León as the site for its new North American heavy-duty truck factory, with an estimated investment of US $700 million.

All these projects, and many others, have the potential to provide a significant boost to the Mexican economy.

New FDI record to be set in 2024 

Final numbers won’t be in until early 2025, but all indications are that a new record for foreign direct investment (FDI) in Mexico will be set in 2024.

The most recent Economy Ministry data showed that FDI exceeded US $31 billion in the first six months of the year, a 7% increase compared to the same period of 2023.

The Mexican Business Council for Foreign Trade, Investment and Technology (COMCE) predicts that FDI will total $38.41 billion this year, which would represent an increase of 6.5% compared to the record high of $36.06 billion in 2023.

There is some concern that the majority of the FDI in Mexico this year has been “reinvestment of profits” by companies that already have a presence here, rather than “new investment.”

But foreign investment of any kind represents confidence in Mexico, and the “new investment” percentage of overall FDI should increase in coming years, as long as a good proportion of the companies that have announced investment plans go ahead with their proposed projects.

COMCE, for one, is confident that will happen, predicting that FDI will reach $39.3 billion next year before surging to $48 billion in 2026.

Will Mexico’s trade and investment relationship with China help or hinder its economy? 

We included this story in our selection of the biggest news and politics stories of 2024 (see here).

We’re including it here as well because of the current impact China is having in Mexico via trade and investment, as well as the country’s potential impact in the future.

Let’s look at trade first.

An influx of Chinese imports has had a significant impact on Mexico’s consumer market, and even changed the face of the retail landscape in Mexico City’s historic center, one of the country’s most important commercial hubs.

Chinese cars have also established a foothold in the Mexican market.

“Mexico finds itself, quite suddenly, awash in Chinese cars. Hundreds of thousands of them,” auto-sector analyst Michael Dunner wrote in November.

If demand for Chinese cars continues to grow in Mexico, Mexican consumers will buy fewer vehicles made in Mexico, which would hurt the Mexican auto sector. Chinese automakers such as BYD have plans to open plants in Mexico, and while that investment could benefit Mexico in a variety of ways, it could also generate problems in Mexico’s relationship with its North American trade partners.

Two Canadian provincial leaders have expressed concerns about Chinese investment in Mexico and even advocated a termination of the USMCA due to their belief that Mexico is too open to such investment. Donald Trump doesn’t want Chinese plants setting up plants on the United States’ doorstep either.

While a termination of the USMCA would appear unlikely — the three-way pact will be “reviewed” in 2026 — any deterioration in Mexico’s trade relationship with the U.S. and Canada as a result of its openness to Chinese investment would have a detrimental impact on the Mexican economy.

As I wrote last month:

“From Mexico’s perspective, there are some important questions to consider.

Is Chinese investment a blessing, a curse or both?

Should Mexico continue welcoming all Chinese companies, including automakers, in pursuit of investment-related benefits such as job creation and higher economic growth?

Or should it be very selective in the Chinese investment it accepts in order to avoid upsetting its North American trade partners?”

The federal government has made it clear that its priority is strengthening trade and investment relationships with its North American neighbors, but it hasn’t shut the door completely on China.

However, with regard to trade with China, Mexico is now making a concerted effort to reduce reliance on Chinese goods. For the import substitution plan to succeed production in Mexico will have to increase, which would benefit the Mexican economy. Additional tariffs on imports will also likely be needed to make Mexican-made goods more competitive.

Just last week, the federal government announced new tariffs on textile goods including clothes to protect the Mexican textile industry. Cheap Chinese clothes will inevitably become more expensive, potentially upsetting Mexican consumers.

Despite that, look out for more tariffs on Chinese products in 2025.

Trump’s proposed tariffs could trigger recession in Mexico

We also included this story in our selection of the biggest news and politics stories of 2024 (see here).

We’re including it here as well given the major impact U.S. tariffs would have on the Mexican economy if they were to be imposed on Mexican exports.

Gabriela Siller, director of econonomic analysis at Banco Base, said in late November that the Mexican economy would go into recession if Trump keeps his word and imposes a 25% tariff on Mexican exports to the United States.

Similarly, the Associated Press reported that “the tariffs would probably plunge Mexico into an immediate recession.”

Some 150,000 export sector jobs would immediately be lost, according to manufacturing association INDEX.

Siller also said that if the incoming U.S. president’s tariff threat “materializes,” foreign companies will “gradually” leave Mexico.

Tariffs on Mexican exports to the United States would, of course, significantly diminish Mexico’s attractiveness as a nearshoring destination and make a “nearshoring boom” less likely in coming years. Mexico’s export sector — an engine of the Mexican economy — would inevitably suffer.

Earlier this month, Bloomberg reported that Japanese auto manufacturer Mazda was reconsidering its investment strategy in Mexico over uncertainty related to tariff threats made by Trump. In that respect, Mazda is certainly not alone.

Interest rates fall from record high level 

The Bank of Mexico’s benchmark interest rate was a record high 11.25% at the start of the year, having reached that level in March 2023 at the end of a 21-month tightening cycle aimed at combating high inflation.

Now, after five interest rate cuts this year, the central bank’s key rate is 125 basis points lower at an even 10%. And Bank of Mexico Deputy Governor Jonathan Heath recently told reporters that the central bank could vote continue its easing cycle at its February 6 meeting and cut interest rates up to 50 basis points.

At 4.55% in November, Mexico’s annual headline inflation is still above the Bank of Mexico’s 3% target, but the central bank has focused more on the decline in core inflation, which it has said “better reflects inflation’s trend.”

The annual core inflation rate declined for a 22nd consecutive month in November to reach 3.58%.

More interest rate cuts are expected in 2025 — and they would be very welcome in what is forecast to be a low-growth environment in Mexico.

The Mexican economy slows 

As is the case with FDI, economic growth data for 2024 won’t be published until early 2025, but there is no doubt that the Mexican economy slowed this year.

GDP increased just 1.5% annually in the first nine months of the year compared to the same period last year, according to national statistics agency INEGI. That level of growth represents a significant slowdown compared to the 3.2% expansion of 2023.

The consensus forecast of analysts recently consulted by the Bank of Mexico is that the Mexican economy will record a growth rate of 1.6% in 2024, and just 1.12% next year.

Such low levels of growth are clearly not indicative of an economy that is booming as a result of high levels of foreign investment. The new federal government will certainly hope that growth will increase as it pursues a range of economic initiatives including a plan to develop 10 new industrial corridors spanning all 32 federal entities of Mexico.

One positive despite this year’s economic slowdown is that Mexico’s job market has remained strong. The unemployment rate was 2.5% in October, just above the record low of 2.3% in March.

United States and Mexico forge semiconductor partnership 

The announcement that the United States would partner with Mexico in a new semiconductor initiative whose ultimate aim is to strengthen and grow the Mexican semiconductor industry was big news this year.

The expectation is that the partnership — provided it continues during Trump’s second term — will bear fruit in the coming years.

“What I see in five years is a very well-integrated [semiconductors] supply chain [in North America],” Pedro Casas Alatriste, executive vice president and CEO of the American Chamber of Commerce of Mexico, told Mexico News Daily in July.

The U.S. also announced a regional semiconductor initiative in July that U.S. Secretary of State Antony Blinken said would “turbocharge” capacity in the Americas to assemble, test and package the critical electronic components. And in October the United States Embassy in Mexico and the National Chamber for the Electronic, Telecommunications and Information Technology Industry presented a joint Master Plan for the Development of the Semiconductor Industry in Mexico for 2024 to 2030.

As things stand, it appears that the semiconductor industry could play a significant role in the Mexican economy in coming years. Indeed, the growth of Mexico’s semiconductor sector could become one of Mexico’s biggest economic success stories in the years ahead.

By Mexico News Daily chief staff writer Peter Davies (peter.davies@mexiconewsdaily.com)

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Deputy Governor Jonathan Heath told reporters this week that growing uncertainty with regard to U.S. trade, in conjunction with ratings agencies’ outlooks and Mexico’s economic prospects at the time of the Feb. 6 meeting, will influence the final decision.

“If Trump doesn’t announce a major disruption (in his inauguration speech) on Jan. 20, if inflation is in line with projections and as long as there’s no unanticipated shock, discussion prior to the February decision could be between cutting the benchmark rate by 25 to 50 basis points,” Heath said in a written response to questions on Monday.

The central bank lowered its benchmark interest rate by 25 basis points five times in 2024, but said after its last meeting on Dec. 19 — in which it reduced the rate to 10% — that it was open to larger cuts.

“In view of the progress on disinflation, larger downward adjustments could be considered in some meetings, albeit maintaining a restrictive stance,” the bank said in a post-meeting statement, according to the news agency Reuters.

The statement also referenced the Mexican peso’s volatility amid “the possibility of measures that could weaken integration with our main trading partner.”

Heath mentioned the possibility of tariffs on U.S. imports from Mexico as one cause of uncertainty. U.S. President-elect Donald Trump threatened to levy a 25% tariff on goods from Mexico if more action is not taken to curb the flow of drugs and migrants into the United States, and Mexico’s President Claudia Sheinbaum responded that she would impose reciprocal tariffs.

Economic growth is another concern. Analysts polled by the central bank expect the Mexican economy to grow just 1.12% in 2025, from around 1.6% this year, Reuters reported.

In the face of this uncertainty, Heath said it is “reasonable” to speculate that the benchmark interest rate will end 2025 between 8% and 8.5%, a real possibility if aggressive action is taken at the bank’s February meeting.

Though a 50-basis-point cut is possible at the next meeting, any decision by the central bank board is unlikely to be unanimous, Heath said, as other deputy governors differ on the speed and size of rate cuts to bring inflation back within its 3% target.

The 25-basis-point cut at the December meeting was unanimous, but Heath himself was the sole dissident during the bank’s September meeting at which the other five board members moved to cut the rate to 10.50%.

Heath, in an early October podcast with bank Banorte, said that even though core inflation is inching toward its target, the need to keep rates high still persisted.

As it is, the bank projects that headline inflation will fall to 3.8% by the end of next year, slowing from the 4.6% projected at the end of this month.

Looking ahead, Heath said this week that if Mexico is not hit with any negative shocks, inflation should come to within 3% by the third quarter of 2026.

With reports from Reuters, El Financiero and El Economista

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The initiative would involve a total US $21 billion in investment hopes to create 3 million jobs by 2050.

Israel Hurtado, head of AMH2, met with Jorge Islas, the Undersecretary of Energy Transition at SENER, Jorge Islas, to present the association’s Clean Hydrogen Industrial Strategy, an action plan showing how green hydrogen could replace fossil fuels in various industries.

Key points of the strategy include establishing a manufacturing sector focused on hydrogen production and focusing on the production of hydrogen fuel cells, electrolyzers and hydrogen-powered electric turbines, as well as both light and heavy hydrogen vehicles.

Islas and his team reportedly committed to collaborating with AMH2 to promote a green hydrogen industry in Mexico in an organized and efficient way. 

“The green hydrogen industry would also boost the generation of renewable energy, which is crucial for producing clean hydrogen. At the same time, leveraging the potential of clean hydrogen could significantly help decarbonize the country’s economy,” Hurtado told newspaper El Economista. 

Mexico’s Paris Climate Agreement commitment is to reduce greenhouse gas emissions 35% by 2030.

Hurtado added that AMH2’s strategy includes wide-ranging recommendations for execution, such as support for infrastructure development, technology adoption, training programs to build human capital and creating an inter-institutional monitoring system.

According to the industry association, Mexico is an optimal region for renewable energy production. Its hydrogen production costs are 64% lower — at US $1.40 compared to US $2.30 in other countries.

However, Islas said Mexico will face challenges to properly develop the nation’s green hydrogen industrial sector. Mexico needs to develop sufficient infrastructure, establish certifications and regulatory standards, as well as create a comprehensive national hydrogen strategy and reduce hydrogen production costs. 

Incentives and tax benefits would also encourage clean hydrogen production, he said.

With reports from Reporte Índigo and Forbes Mexico.

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Several businesses have been meeting with Pemex officials to address the mounting debt, but as of Thursday no payment plans had been announced, according to El Economista newspaper.

“I can confirm that no payments have been made nor is there a tentative date for payments to be made,” one oil drilling company rep told El Economista. “It appears possible that we might not get paid until February.”

Oil and Gas Magazine reported on Wednesday that Pemex canceled a Monday meeting with Senate Energy Committee members during which the debt to subcontractors was to be discussed.

Committee member Óscar Cantón Zétina, a senator from the oil-producing state of Tabasco, expressed a desire to reschedule the meeting in the near future. Before the congressional session went into recess last week, Cantón had presented a point of order demanding that Pemex’s debt with suppliers be made public.

President Sheinbaum orders review of Pemex debt

Pemex has been the world’s most indebted oil company for years and owed national and international service providers nearly US $22 billion back in April, according to the news agency Reuters.

Earlier efforts to reduce its overall debt of nearly US $100 billion have done little to ease the debt owed to suppliers which now sits at around US $20.5 billion, according to El Economista.

On Nov. 28, President Claudia Sheinbaum ordered a review of the debt owed to suppliers, saying that a variety of payment mechanisms were being studied and refined, though she provided no details.

That same day, it was reported that Pemex had placed a freeze on new contracts with service providers.

The news agency Bloomberg News reported that an internal company document described the action as a temporary halt by Pemex’s exploration and production arm that applied to new agreements with contractors that had not been previously formalized.

A Pemex statement explained that it would be performing an analysis of pending deals coming due before year-end and that select contracts deemed necessary could still be signed.

The Finance Ministry is reportedly working “to enlist a group of banks to provide Pemex with financing to pay off the company’s debts to service providers,” Bloomberg reported, but such loans may come too late for some suppliers.

Suppliers in Campeche sound off

Mexico Business News reported on Dec. 3 that business leaders in the state of Campeche sounded the alarm over the delayed payments from Pemex.

Many local companies are having difficulty meeting year-end obligations, such as employee bonuses, social security contributions, taxes and payments to Infonavit, Mexico’s public housing agency.

Some of the debt dates back to 2023, El Economista reported. Several businesses face threats of asset seizure due to their own unpaid loans, Mexico Business News reported, and the situation is so dire that an organization called “The Broad Front of Subcontractors Serving Pemex” was formed.

The Front staged several demonstrations in November, threatened to blockade a bridge in Ciudad del Carmen and announced a protest march for Friday.

Around the same time, Reuters reported, the Mexican Association of Oil Service Companies (Amespac) sent a letter to Pemex asking the company to pay its members overdue debts totaling US $5.1 billion. The association represents some of the most important oil service providers in Mexico.

Amespac argued that just setting up a schedule “would provide certainty for operations and allow companies to fulfill their commitments.”

“This situation has caused an adverse effect on our finances and a negative impact in the areas where we operate,” it wrote.

The financial difficulties impact a variety of businesses, including multinationals such as Baker Hughes and Halliburton.

Small companies also have been hit by the debt crisis. El Economista reported that a Campeche helicopter company that transports oil workers to offshore rigs closed down this month.

In the state of Tamaulipas, state Energy Development Minister José Ramón Silva said roughly 700 local businesses have been affected, including 400 companies that had bid on contracts or applied to be formally registered as suppliers.

With reports from El Economista, Bloomberg News and Mexico Business News

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Additional rate cuts appear likely in 2025, and some may even be larger than those implemented this year.

Thursday’s cut was the fifth time this year that the Bank of Mexico’s five-member board voted in favor of a 25-basis-point reduction to the central bank’s key interest rate. It came after the United States Federal Reserve cut its key rate by 25 basis points on Wednesday.

The Bank of Mexico’s overnight interbank interest rate, as it is officially known, was held at a record high of 11.25% between March 2023 and March 2024, when this year’s initial cut was made.

The reduction announced on Thursday was widely expected, even though Mexico’s annual headline inflation rate — 4.55% in November — remains above the 3% target of the Bank of Mexico (Banxico).

In a statement announcing the cut, the central bank noted that “annual headline inflation decreased from 4.76 to 4.55% between October and November.”

Banxico also acknowledged that “core inflation, which better reflects inflation’s trend, continued its clear downward trend, going from 3.80 to 3.58% in the same period.”

“… Looking ahead, headline and core inflation are still foreseen to follow a downward trend,” the bank said before highlighting that “the possibility that tariffs on U.S. imports from Mexico are implemented has added uncertainty to the forecasts.”

Banxico said that “looking ahead,” its governing board “expects that the inflationary environment will allow further reference rate reductions.”

“In view of the progress on disinflation, larger downward adjustments could be considered in some meetings, albeit maintaining a restrictive stance,” the bank said.

“… Actions will be implemented in such a way that the reference rate remains consistent at all times with the trajectory needed to enable an orderly and sustained convergence of headline inflation to the 3% target during the forecast period,” Banxico said.

The central bank anticipates that inflation will trend down in 2025 and 2026.

It is currently forecasting a 3.8% annual headline rate in the first quarter of 2025, with that rate predicted to fall to 3.5% in Q2, 3.4% in Q3 and 3.3% in Q4 of next year.

Banxico forecasts that the headline rate will continue to fall gradually in 2026 to reach the 3% target in the third quarter of that year.

Reuters reported that the Mexican peso “reversed earlier losses and strengthened marginally against the dollar following Banxico’s rate decision.”

It was trading at 20.31 to the US dollar shortly before 4 p.m. Mexico City time.

Mexico News Daily 

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Speaking at President Claudia Sheinbaum’s morning press conference, Ebrard said that a 35% tariff that already applies to some textile imports will apply to 138 additional “made” or finished textile products such as clothes.

The tariff, which will be imposed on products imported from countries with which Mexico doesn’t have a free trade agreement, appears to be mainly targeted at cheap Chinese clothing.

Ebrard said that the 35% tariff on 138 additional textile products “complements” the list of textile products on which a 35% tariff was imposed in April. In late April, Mexico implemented 5–50% tariffs on more than 500 goods imported from countries with which it doesn’t have a free trade agreement.

Ebrard also announced on Thursday that a 15% tariff will apply to 17 categories of unfinished “textile goods.”

He said that the 15% tariff would also “complement” tariffs that were imposed earlier this year. In addition, Ebard said that Mexico was “increasing the list of [textile] products that can’t be imported” to Mexico. He said that some companies are importing certain textiles as inputs for final goods to be exported, but are in fact selling them as is in Mexico and consequently evading the payment of taxes.

“In summary, we’re increasing to 35% the tariff on finished [textile] products … that [are currently sold at] unbelievably low prices. We’re increasing to 15% [tariffs on] the importation of [unfinished] textile goods to protect our national industry. And we’re closing this door that is being abused,” he said.

Ebrard said that Sheinbaum “instructed” the Economy Ministry to impose the new tariffs.

The new duties will take effect the day after the tariff decree — which was signed by Sheinbaum and Ebrard — is published in the government’s official gazette. That could happen as soon as Thursday evening.

The temporary tariffs will remain in effect until April 22, 2026, according to Ebrard.

The announcement of the new tariffs comes as Mexico seeks to reduce its reliance on imports from China and other Asian countries and bolster domestic production. Mexico’s trade and investment relationship with China has been questioned and/or criticized in both the United States and Canada, and could be a point of contention at the review of the USMCA trade pact in 2026.

Federal authorities have recently carried out raids on stores in Mexico City and Sonora selling counterfeit and/or illegally imported Chinese goods.

It remains to be seen whether Mexico will increase tariffs on other imports from countries with which it doesn’t have a free trade agreement. One potential target could be Chinese electric vehicles, which have coming into Mexico in large numbers, raising concerns in the United States and Canada.

Ebrard: Without tariffs, textile industry jobs will be lost 

Ebrard said that Mexico’s textile industry is “very important” as it employs some 400,000 people. He highlighted that México state, Puebla, Hidalgo, Coahuila and Guanajuato are Mexico’s largest textile producers.

Ebrard said that employment in the textile industry reached its “lowest level” in 2024 after 79,000 jobs were lost “in recent years.”

“That’s why measures were taken in April,” he said, referring to the imposition of tariffs on some textile products.

Ebrard said that 75,000 additional jobs will be lost “if we don’t close the door and don’t increase tariffs.”

It wasn’t entirely clear, but it appeared that the economy minister was saying that that number of jobs would be lost in México state alone. That state, which borders Mexico City, is the country’s top textiles producer.

Ebrard also said that “the gross domestic product of the textile industry” in Mexico “has declined at an annual rate of 4.8%,” but didn’t specify the period he was referring to.

“In other words, we’re losing approximately 1.229 billion pesos (US $60.5 million) every year,” he said.

Ebrard highlighted that since 2019, Mexico has been importing more textiles and clothing than it exports.

With the protectionist plan announced on Thursday morning, “we’re going to promote the development of our national industry,” the economy minister said.

“… A strategic objective of the [government’s] shared prosperity [plan] is to increase the national content in everything we consume. The more Mexican content there is, the more jobs there will be in Mexico,” Ebrard said.

The tariffs and ban on the import of certain textile products will “avoid practices that affect employment and the competitiveness of our economy, [and] avoid technical contraband,” he said.

“What is ‘technical contraband’? Lying to the authorities, … saying ‘this is an intermediate product, I need this piece to finish what is going to be sold,’ and it isn’t true,” Ebrard said, noting that the products are often sold in markets as final goods.

“… In summary, these are measures to protect one of the most important industries in our country in terms of jobs. …. If these measures aren’t taken to avoid abuses or dumping prices, … which are extremely low, national industry will be at a disadvantage,” he said.

Mexico News Daily 

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