Daily: Mexico Economic 12.12.2025

THE BOTTOM LINE IN 1 MINUTE:

How Today's Updates Affect You

Senate approved tariffs up to 50% on 1,463 products from non-FTA countries—automotive at 35%, textiles at 50%—generating projected US$3.8B annual revenue while appeasing US pressure ahead of USMCA review. China and South Korea lodge formal protests while Economy Minister Ebrard defended "surgical" measures protecting 1.3 million automotive jobs. The Peso reached 18.16 per dollar—strongest since July 2024—as carry trade appeal offsets tariff uncertainty. José Medina Mora assumes Business Coordinating Council (CCE) presidency pledging unity and collaboration with Sheinbaum on trade negotiations, signaling business pragmatism over confrontation. For decision-makers: tariffs effective January 1 reshape sourcing strategies for Asian intermediates; CCE leadership change offers government affairs window; China retaliation risk requires contingency planning for exporters.

FEATURED STORY

Mexico Approves Tariffs Up to 50% on Non-FTA Imports—Targets Chinese Autos, Textiles as Sheinbaum Balances US Pressure With Domestic Industry Protection

Details | The Senate approved on December 10 a reform to the Law on General Import and Export Taxes imposing tariffs of 5-50% on more than 1,463 product categories from countries lacking free trade agreements with Mexico, with 76 votes in favor, 5 against, and 35 abstentions. The legislation targets automotive (35% tariff, up from current 20%), textiles and apparel (50%), steel and aluminum products (25%), footwear (35%), and consumer electronics (15-25%).

Economy Minister Marcelo Ebrard stated the measures affect only 8% of Mexico's foreign trade and are designed to protect "very specific sectors" including automotive (1.3 million jobs) and textiles. Countries primarily affected include China (US$130 billion in 2024 imports to Mexico), South Korea, India, Indonesia, Thailand, Russia, Turkey, Brazil, and South Africa. The government projects the tariffs will generate MX$70 billion (US$3.8 billion) in additional annual revenue. Implementation begins January 1, 2026.

Analysis| The final tariff rates underwent 60% modification from September's original proposal—automotive reduced from 50% to 35%, with many intermediate goods receiving lower rates or exemptions. Ebrard's emphasis on targeting "finished goods" rather than production inputs reveals the underlying strategy: demonstrate alignment with US concerns about Chinese transshipment while preserving Mexico's attractiveness for manufacturing and assembly operations that depend on imported components.

The January 1 implementation creates an immediate decision point—fourth-quarter purchases of finished goods from affected countries should be accelerated into December, while companies dependent on intermediate inputs should verify whether their specific tariff codes received exemptions or lower rates. The distinction matters operationally: a textile manufacturer importing Chinese fabric (likely 5-15% tariff) faces different cost structures than retailers importing finished Chinese apparel (50% tariff), creating opportunities for companies that can shift from importing finished products to establishing Mexican assembly operations.

China's formal protest and South Korean countermeasure evaluations signal retaliation risk for Mexican exporters, particularly agricultural products where Asian markets provide alternatives to US demand—tequila, beer, auto parts, and fresh produce exporters should prepare contingency plans if Chinese customs inspections intensify or Korean regulators impose new certification requirements.

BY THE NUMBERS

Key indicators from yesterday sessions:

• MXN/USD: 18.16 (-0.11%) – Peso strengthened to its best level since July 2024 on December 9, supported by mounting expectations of Federal Reserve rate cuts and Mexico's tight labor market (unemployment at 2.6%), though retreated slightly to 18.30 by December 10 as rising US yields narrowed Mexico's carry trade advantage.
• S&P/BMV IPC: 64,453 (+1.65%) – Mexico's benchmark stock index (BMV) reached a new all-time high on December 9, driven by airport operators Grupo Aeroportuario del Pacífico (GAP) up 4.26% and OMA up 3.51% following Bank of America rating upgrades, with the index posting nearly 50% annual returns in dollar terms.

TRADE & COMMERCE

José Medina Mora Assumes CCE Presidency Pledging Business Unity and USMCA Collaboration—Signals Pragmatic Engagement With Sheinbaum Administration Ahead of Critical 2026 Trade Review

Details | José Medina Mora Icaza was elected unanimously as president of the Business Coordinating Council (CCE) for the 2025-2027 term, succeeding Francisco Cervantes Díaz. In his inaugural address, Medina Mora outlined three pillars: economic growth acceleration, robust participation in the 2026 USMCA review, and democratic dialogue between sectors. He emphasized that "the CCE is not opposition" and praised President Sheinbaum's openness to dialogue on investment-affecting issues. Medina Mora committed to presenting a united business front to the US, particularly given tariff threat contexts, and pledged constant dialogue with US business organizations to achieve optimal conditions for the July 2026 review.

Analysis | Medina Mora's explicit statement that "the CCE is not opposition" marks a tonal shift from his predecessor's more confrontational approach during judicial reform debates. His emphasis on cross-border business coordination suggests the CCE will work through channels like the US Chamber of Commerce and the National Association of Manufacturers to build joint North American business positions rather than relying solely on government-to-government diplomacy.

The leadership transition creates a 3-6 month window to shape CCE positions on USMCA issues before negotiations intensify: firms with specific concerns about rules of origin, labor enforcement mechanisms, or dispute resolution should engage CCE working groups now rather than after positions solidify. The timing matters practically—Mexico became the top US trade partner with US$399.5 billion in September 2025 exports, meaning business community input on preserving this relationship carries weight with both governments, but only if channeled through coordinated positions rather than fragmented lobbying.

REGULATORY & LEGAL

Senate Approves Vape Ban With Prison Terms Up to 8 Years—Health Ministry Centralization Reform Advances Alongside Controversial Criminalization Measures

Details | The Senate approved a total ban on vaporizers and electronic cigarettes with 76 votes from MORENA and the Green Party against 37 opposition votes. The reform establishes prison sentences of 1-8 years for individuals involved in production, distribution, sale, or marketing of vaping products. The legislation also modifies the Health Ministry's role in pharmaceutical and medical equipment procurement, strengthening centralization in the health system. Opposition lawmakers criticized the bill for criminalizing production rather than consumption, warning this creates opportunities for organized crime involvement.

Analysis | The 1-8 year prison exposure exceeds penalties for many property crimes and creates immediate compliance requirements for retailers: vaping inventory must be liquidated in December before January 1 implementation to avoid criminal liability for possession after the ban. The Health Ministry centralization component affects pharmaceutical companies differently—state-level contracts likely require renegotiation as procurement authority moves to federal offices, meaning sales teams structured for decentralized engagement need reorganization. Opposition concerns about black market creation have empirical support from tobacco prohibition experiences in other jurisdictions, but the practical implication for legitimate businesses is simpler: exit the category entirely rather than attempting to navigate gray areas, as enforcement discretion around "storage for disposal" or "existing inventory" isn't worth 1-8 year prosecution risk.

ENERGY & INFRASTRUCTURE

BlackRock Predicts State Oil Company PEMEX Return to Debt Markets Despite Sheinbaum Opposition

Details | José Luis Ortega, BlackRock Mexico's director of fixed income and multi-asset active investments, stated that the state oil company PEMEX will return to debt markets despite President Sheinbaum's efforts to avoid such recourse. Ortega described PEMEX as unlikely to achieve self-sustainability in the short term, requiring federal government support "for several years" given current conditions. PEMEX reported a net loss of MX$45.1 billion in third-quarter 2025, compared to MX$430 billion losses in the prior year. The company faces financial debt exceeding US$100 billion while crude production has reached historic lows.

Analysis | BlackRock's public contradiction of Sheinbaum's stated policy reflects market assessment that PEMEX's financing gap—MX$45.1 billion quarterly losses even after "improvement" from prior year—exceeds what federal budget transfers can cover given Mexico's own fiscal constraints (6% deficit, 54% debt-to-GDP ratio).

The asset manager's statement serves dual purposes: positioning clients for eventual PEMEX bond issuance while pressuring Mexican authorities to prepare market-friendly terms rather than emergency placements. Energy companies should monitor whether financing pressures force Sheinbaum to relax restrictions on private sector participation in mature oil fields—PEMEX lacks capital for enhanced recovery in aging reservoirs where private operators could arrest production declines, but ideological resistance to private oil involvement has limited such partnerships despite legal authorization since the 2013 energy reform.

QUICK HITS:

5 More Updates Worth Tracking

1/ Banco Base Cuts Mexico GDP Forecast to 0.8%: Director Gabriela Siller revised projection from 1% amid USMCA uncertainty and fixed investment collapse, now closer to Banxico's 1.1% than government's 2.3% target.

2/ Northern Mexico Economy Contracts 1.3% in Q3: Manufacturing fell 3.4% as US trade uncertainty chilled nearshoring investments, with Banxico analysis director citing cooling export sector as primary driver.

3/ Fernando Chico Pardo's 25% Banamex Stake Nears Approval – Mexican authorities in late-stage review of billionaire's minority investment in Citigroup retail unit ahead of planned 2026 IPO.

4/ Tourist Arrivals Hit Record 8.3 Million Through October: International visitors up 10.7% generating US$2.44B economic spillover, demonstrating sector resilience despite GDP weakness.

5/ Mexico Ranks Fourth Most Dangerous Country in ACLED Report – 240,000 deaths and 204,605 violent events in 2025 place Mexico behind Palestine and Myanmar, with criminal band violence as primary driver.