Tariffs, Cuts, and Uncertainty Drive Mexico’s Worst Industrial Semester in Five Years
Mexico’s industrial activity stalled in June 2025, marking the end of a rough six-month period. Official data from the National Institute of Statistics and Geography (INEGI) reveals a 1.3% drop in output for the first half of the year.
This marks the harshest semester since the pandemic crisis of 2020. June cemented the negative trend. Activity dipped 0.1% from May, as three of four major sectors lost ground.
Mining led the decline with a 1.4% drop, pushed by weaker oil and gas production. Utilities—electricity, gas, water—and construction both fell 0.2%. Only manufacturing edged up, but its 0.3% gain was too slight to offset wider losses.
This downturn did not come suddenly. Over the past year, Mexican industry saw nine months of falling output and four straight months of year-on-year declines. The contraction cut across sectors.
Mining plunged 8.8% in the semester. Utilities dropped 2.1%, construction fell 1.1%, and civil engineering works collapsed by 24.6% due to public investment cuts.
Manufacturing stayed just above water, with 0.1% growth; however, 13 of its 21 subsectors shrank, including wood products (-7.1%), leather (-6.2%), clothing (-6.1%), non-metal minerals (-5.4%), and textiles (-4.8%).
Only a handful of areas grew, such as miscellaneous manufacturing (+27.4%) and electrical accessories (+3.5%). Two main forces weighed on the industry. First, trade uncertainty looms large.
New U.S. tariffs on metals and vehicles raised costs for Mexican manufacturers and clouded the future of the cross-border USMCA deal.
Because autos and parts represent the bulk of Mexico’s exports, this instability matters for every factory worker and supplier linked to the U.S. market.
Second, domestic policy changes created headwinds. Judicial reforms replacing top judges, new regulators in telecom and competition, and stronger state control in energy injected unpredictability into the business climate.
The government cut its fiscal deficit from 5.7% of GDP in 2024 to 3.9% this year, slashing public works vital for the construction sector.
For international readers, the June slowdown marks more than just temporary trouble. It signals deeper shifts in Mexico’s trade relations, investment confidence, and the balance between government and private industry.
More: Latin America news in English, every day from The Rio Times.
In depth
This article was produced by The Rio Times’ automated AI newsroom. Editorial responsibility: Matthias Camenzind, Publisher and Editor-in-Chief. How we use AI · Report an error