Steady in the Storm: How Mexico Maintains Business Confidence Amid Tariff Tensions

A Long-Standing U.S.–Mexico Alliance

For well over a century, Mexico and the United States have maintained a deep economic interdependence. Two-way trade between the countries has soared, reaching nearly $798 billion in goods in 2023. The USMCA, which replaced NAFTA in July 2020, codified this interdependence by eliminating withdrawal risks, strengthening labor and environmental standards and bolstering regional supply chains. Intra-regional trade and services under USMCA supported 17 million jobs in 2022, with Mexico accounting for a remarkable 9 million of them.

Despite these strong foundations, Mexico has recently faced fresh headwinds. On the table are proposed U.S. tariffs of up to 25% on imports from Mexico – ostensibly aimed at addressing border and fentanyl issues – a move that threatens to disrupt trade and rattle investor confidence. Mexico responded decisively: its administration initiated high-level dialogues with Canada and the U.S. to safeguard the USMCA framework and shore up the trilateral pact. Trade experts and business leaders in northern Mexico have expressed confidence that the region’s integration with Canada remains solid, though they caution that continued diplomatic engagement is necessary to mitigate risks.

This enduring relationship is underpinned by a broad-based integration that spans multiple sectors, from automotive to electronics and beyond. NAFTA’s implementation in 1994 catalyzed a manufacturing boom that fostered deep supply chain ties. Car parts, aerospace components and electronic devices often cross the border several times during production, a testament to the tightly woven industrial fabric of North America. These ties have allowed the region to present a unified front against competition from Asia and Europe, creating a robust ecosystem that benefits all parties involved.

Beyond trade, the two countries share critical energy infrastructure, such as pipelines and electricity grids, further cementing their economic linkage. The integration has also extended to education and research collaborations, with numerous U.S. universities partnering with Mexican institutions to advance technology and workforce skills relevant to the industrial sectors flourishing under USMCA.

The strategic alliance is not only economic but also geopolitical. As global power dynamics shift, particularly with tensions between the U.S. and China, Mexico’s geographic position becomes even more advantageous. It serves as both a manufacturing hub and a geopolitical buffer, aligning closely with U.S. interests in maintaining regional stability and supply chain security.

Felipe Villarreal, CEO of Alian Plastics, summed it up: “Mexico is not just a neighbor; we are partners in production, innovation and progress. Our role in the North American economy is indispensable, and we are prepared to strengthen this position further.”

In this context, Mexico’s message to the world is clear: despite political noise and periodic policy shifts, the country is unwavering in its commitment to fostering a resilient, mutually beneficial partnership with the United States. This enduring alliance continues to offer fertile ground for investment, innovation and shared prosperity, making Mexico a pivotal player in the evolving global economic landscape.

Business as Usual Despite the Noise 
Faced with potential tariffs, Mexico’s response has been nuanced and proactive rather than reactionary. Negotiations with U.S. officials remain ongoing, while Mexico quietly reassures investors that trade and business continuity are preserved under USMCA’s protective exemptions.

Carlos Arguimbau, CEO of telecommunications provider IENTC, emphasized that Mexico sees itself as a strategic commercial partner: “U.S. financial partners offer ideal conditions for infrastructure financing... we connect key data centers in the U.S. like Los Angeles, Phoenix, McAllen... It’s very interesting how partners in the U.S. work for us,” said Arguimbau. That connectivity spans 29 of Mexico’s 32 states, reaffirming the country’s readiness both operationally and geopolitically. IENTC’s expansive fiber network, which integrates rural and urban regions alike, has made the company a vital player in Mexico’s digital infrastructure push, especially as global demand for data-intensive industries continues to surge.

Grupo Estrategia Política’s CEO Gustavo Almaraz added that Mexico under President Sheinbaum is “playing more with the U.S. than with China.” He described Mexican diplomacy as strategic, business-centric, and “proactive,” working closely with Washington and Canadian counterparts on trade, migration, and fentanyl containment. He noted that Mexico now engages CEOs and business councils directly to align interests with theirs.

Ethical Innovation and Patient-Driven Growth
In the healthcare sector, companies like Stendhal Pharma are showing how Mexico can leverage its market opportunities to build ethical innovation and patient access in Latin America, driven by sustained double-digit growth and a bold, tailor-made strategy.

The company puts patient outcomes at the center of its mission, expanding across 14 countries with a model built on flexibility and trust. “Changing patients’ lives is what drives everything we do,” says Rodrigo Ruiz Mingramm, General Manager for Mexico and Latin America.

Stendhal has gained global recognition for its ethical business practices and operational excellence, earning a place among the most ethical companies in Mexico. “There’s no other way of doing business for us,” Ruiz adds.

Strategic partnerships with leading global innovators have allowed Stendhal to maintain an “unlimited pipeline,” identifying breakthrough molecules in late-stage development and tailoring market strategies for each partner. “We design a custom go-to-market model for every alliance,” Ruiz explains.

With two to five product launches annually, the company continues to strengthen its presence in high-impact areas such as oncology, rare diseases and central nervous system disorders. “We aim to bring solutions to needs that remain unmet for doctors and patients alike,” Ruiz explains.

Stendhal measures success not by the size of its portfolio, but by the number of patients who can access its therapies. “Our products save lives – and that’s the only metric that matters,” Ruiz concludes.

USMCA’s Stabilising Role 
The USMCA remains the bedrock of Mexico’s economic narrative. With 83.5% of Mexican exports destined for the U.S. in 2019 and a combined North American economy representing about 30% of global GDP, the pact solidifies Mexico’s role in a massive integrated market. From 2020 to 2023, Mexico attracted approximately $50 billion in U.S. investment and $10 billion from Canada, much of it driven by nearshoring trends aimed at reducing reliance on China.

Even amid sporadic tariff threats, experts suggest the risks are mitigated by USMCA safeguards. UBS has noted these tariffs may not apply to goods substantially transformed within North America. Morgan Stanley analysts also argue markets tend to absorb tariff risk when the broader economic fundamentals remain intact.

Yet, uncertainty has arrived. According to Baker McKenzie, tariffs have led some private equity firms to pause nearshoring deals until the policy picture clarifies. Still, the U.S.–Mexico trade corridor remains structurally strong, and firms continue to recognize Mexico’s proximity, labor efficiencies and cost advantages.

Furthermore, USMCA has instilled a greater sense of legal and regulatory predictability, which is crucial for multinational firms planning long-term investments. The agreement introduced new chapters on digital trade, intellectual property protections, and labor rights, modernizing the framework to address 21st-century commerce. This modernization has been particularly attractive to industries like pharmaceuticals, technology and advanced manufacturing, which depend on clear IP protections and seamless digital exchanges.

Miguel Peregrina, founding partner of Punto Fino Abogados, noted that “the legal stability offered by USMCA is a major reassurance for foreign investors. It provides a solid dispute resolution mechanism and clarity in contractual obligations, which helps mitigate perceived risks in Mexico.”

Similarly, Mariana Raphael, Director General of Connecting Mexico, highlighted the impact on logistics and cross-border services: “USMCA has not just preserved but enhanced the fluidity of trade across borders, particularly for SMEs looking to scale their operations in North America. It simplifies procedures and reduces costs, which is vital for competitiveness.”

Strategic Corporate Confidence

Multinational companies across sectors – from food to tech – are doubling down on Mexico. Leading baker Grupo Bimbo announced a $2 billion investment across seven states through 2028, with its executives confidently stating that potential tariffs would not derail their strategy. Similarly, Unilever committed $1.5 billion through 2028, including a new factory in Nuevo León to create 1,200 jobs. And Mercado Libre pledged a massive $3.4 billion investment in Mexico during 2025, reflecting continued trust in its ecommerce and fintech landscape.

Domestic innovators and global technology leaders alike are reinforcing their presence in Mexico. German automation specialist KUKA is investing $19 million in a new R&D center in Nuevo León, boosting advanced manufacturing capabilities and creating over 400 jobs. Meanwhile, Bosch reaffirmed its commitment with a $100 million investment to celebrate 70 years in the country, further embedding its role in Mexico’s industrial landscape.

Héctor Gutiérrez, President of Konesh Soluciones – a leader in fiscal-tech software – stressed that Mexico’s early adoption of electronic invoicing since 2005 has paved the way for digital compliance ecosystems, helping attract U.S. and European investors seeking regulatory clarity. “We have 2 to 3 billion fiscal documents in our system and work with companies like PepsiCo, Palacio de Hierro, and Louis Vuitton,” said Gutiérrez.

Mexico as a Competitive Gateway 
Mexico illustrates a rising manufacturing powerhouse. Audi, BMW, Tesla, Ford, and other automakers increasingly diversify their supply chains to Mexico, attracted by skilled labor, favorable logistics, and OEM-grade quality, as confirmed by Felipe Villarreal, CEO of Alian Plastics. He highlighted the country’s rising labor costs relative to Asia but emphasized the “nearshoring” effect had hinged on superior quality standards, evidenced by the influx of global automakers to Nuevo León and the Monterrey region. He described how foreign-established teams bringing European and U.S. formulas are fostering rapid local supplier integration.

In the chemicals sector, ICS, a distributor of organic peroxides vital to polymer industries, is developing custom materials branded “Corpol” and targeting ISO 9001. President Humberto Elizalde noted their first U.S. expo was a showcase: “We’re building the distribution filter across Mexico, Central and South America... Looking at strategic alliances,” said Elizalde. ICS is preparing to support new market entrants amid the next wave of manufacturing investment.

Additionally, Mexico’s government and private sectors have invested heavily in logistics infrastructure. Expansions in key ports like Manzanillo and Veracruz, along with new rail connections linking industrial hubs to the U.S. border, strengthen Mexico’s appeal as a continental logistics hub. The Trans-Isthmic Corridor project, aiming to connect the Pacific and Atlantic coasts via rail, positions Mexico to compete with the Panama Canal for specific shipping routes.

The development of specialized industrial parks tailored for sectors like aerospace in Querétaro, automotive in Guanajuato, and high-tech in Guadalajara further illustrate the country’s strategic foresight. These zones offer state-of-the-art facilities, streamlined customs procedures, and dedicated workforce training programs, enhancing Mexico’s competitiveness in attracting foreign direct investment.

Mariana Raphael of Connecting Mexico pointed out that “logistics and infrastructure improvements are key differentiators for Mexico. Investors see not only the cost advantages but also the growing efficiency in moving goods quickly across borders.”

Innovation: From Startups to Industry 4.0

Mexico’s appeal extends beyond manufacturing; it is carving a reputation in innovation. Startups across fintech, software, and proptech attracted 26% higher investment in 2024 compared to the previous year, outpacing European and Southeast Asian growth.

Meanwhile, industrial players are embracing automation. Felipe Villarreal’s injection-molding factories are embedding Industry 4.0 systems to monitor machine performance, predict maintenance issues, and manage cycle times. “We are investing a lot in robots that are taking parts inside the machine to the outside… we improve cycle times and avoid human risk,” said Villarreal.

Querétaro has emerged as Latin America’s fastest-growing aerospace hub, hosting Airbus, Delta, Bombardier and FAMEX, the continent’s largest aerospace fair. Tesla’s planned gigafactory near Monterrey – potentially a $15 billion investment – underlines Mexico’s central role in North American electric vehicle production.

Supporting this ecosystem, Mexico’s education sector is aligning closely with industry demands. Monterrey Institute of Technology and Higher Education (ITESM), one of Latin America’s premier universities, has partnered with global tech firms to develop curricula tailored to advanced manufacturing, AI, and robotics. “We want to move towards a more value-added economy by contributing to innovation,” said David Garza, President of ITESM. “That means building an ecosystem where academia, companies, and startups collaborate to solve real-world challenges.”

The government’s backing of innovation clusters, particularly in Jalisco’s “Silicon Valley of Mexico,” has attracted tech giants like IBM, Oracle, and Intel, which are expanding their research and development operations in the region. This confluence of academia, private sector and government support is creating a vibrant innovation ecosystem that enhances Mexico’s global competitiveness.

Governance, Policy and Innovation Alignment 
Mexico’s “Plan México” strategy under President Sheinbaum seeks to reposition the country as a resilient, sustainable, and innovative economy. Through mechanisms like Circular Economy Development Poles (PODECIBI), Mexico is offering tax benefits to ESG-focused investors.

Further bolstering confidence, BBVA announced a historic six-year investment of over 100 billion pesos ($5 billion) to drive customer experience, financial inclusion and sustainability.

Meanwhile, Baker Tilly Mexico’s Managing Partner Manuel Aguilar reaffirmed Mexico’s macroeconomic stability:

“Mexico and the U.S. have a long-standing business relationship … we will keep growing because the relationship has demonstrated mutual benefits,” said Aguilar. He emphasized that Mexico remains a free-market economy with open capital flows – attributes that are increasingly rare in emerging markets.

A Message of Confidence

Despite periodic political uncertainties, Mexican business leaders exude steady optimism. ILEMCE leaders emphasize flexibility. “We need to move … if you stick with your vision from January 1, you will be out of business,” warned Felipe Villarreal.

The message is echoed by Humberto Elizalde, who believes Mexico’s agility is part of its DNA: “We’re prepared to adapt, to bring in technology, to grow with our partners. This is not just rhetoric, it’s business,” said Elizalde.

Reading the Road Ahead

Hostile headlines may grip global markets, but Mexico continues to invest in its strengths. With a top-tier trade pact in USMCA, a talent base steeped in engineering, a proactive innovation ecosystem and a proven ability to adapt, the country positions itself not as a secondary choice but as a strategic North American hub. The message is clear: Mexico stands open for business, ready for the next wave of world-class investment.