Fitch Affirms Mexico’s Rating as US Tariffs Loom Over Key Exports

Fitch Ratings upheld Mexico’s sovereign credit rating at BBB- with a stable outlook, citing robust external finances and a diversified economy, according to Fitch Ratings and Argus Media analysis.

The agency warned that aggressive US trade protectionism threatens to deepen Mexico’s economic slowdown, with tariffs potentially cutting 0.8 percentage points from 2025 GDP growth. Fitch projects a 0.4% contraction next year, followed by a muted 0.8% rebound in 2026.

Mexico’s export-driven economy faces acute risks as 27% of its GDP relies on US-bound shipments. The automotive sector, representing 18% of industrial output, is already reeling from a 13.74% year-on-year drop in January 2025 car exports.

Proposed US tariffs of up to 25% on select goods could compound losses, particularly for manufacturers integrated into cross-border supply chains. Over 4.8 million undocumented Mexican workers in the US further intertwine the two economies.

Domestic challenges compound external pressures. Manufacturing activity has contracted for 12 straight months, with employment in the sector declining since February 2024.

President López Obrador’s judicial reforms, introducing elected judges, have spooked investors alongside Morena party’s congressional supermajority.

Mexico’s World Bank governance score has deteriorated since 2012, reflecting persistent institutional weaknesses. Fitch notes the USMCA trade pact limits tariff scope, likely shielding energy exports.

However, prolonged uncertainty is stifling business investment, particularly in automakers’ delayed earnings adjustments. Mexico’s central bank maintains prudent fiscal policies, but Pemex’s liabilities and low tax revenues constrain flexibility.

The economic stakes are stark: every 1% drop in US-bound exports equates to a $3.2 billion loss for Mexico. With US tariffs effective April 5 and reciprocal measures pending, bilateral tensions now overshadow the 2026 USMCA review.

As global supply chains recalibrate, Mexico’s growth hinges on navigating protectionism while addressing homegrown structural gaps.

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