Tariffs Slow Mexico’s Economy as Growth Flatlines in Q2 2025 Despite Record Investment

Mexico’s official statistics agency, INEGI, said the economy grew 0.6% in the second quarter of 2025 compared to the previous quarter.

On a year-on-year basis, growth stood at around 0.0%, down from earlier estimates of 1.2%. Services rose 0.8% and industry gained 0.7%, while agriculture and related sectors decreased 2.4%.

In current prices, GDP reached 35.80 trillion pesos, equivalent to approximately 1.92 trillion USD, largely due to inflation rather than real expansion.

This marked two straight quarters of growth—after a 0.2% rise in Q1—meaning Mexico avoided a technical recession, despite flat annual results.

Tariff pressure from the U.S. shaped the backdrop. Washington maintained 25% tariffs on vehicles and auto parts and 50% on steel, aluminum, and copper. Goods not complying with USMCA rules still faced 25%.

A planned 30% tariff scheduled for August was postponed by 90 days, giving exporters short-term breathing room. The U.S. also granted partial tariff exemptions for auto exports under USMCA.

Despite these challenges, foreign direct investment (FDI) reached a record 34.3 billion USD in the first half of 2025, according to Mexico’s Economy Ministry.

This shows that multinationals still rely on Mexico as a production hub due to nearshoring and supply-chain shifts. Analysts expect modest growth for the year.

The Citibanamex survey in early August places the median estimate at 0.3%, while Banamex projects 0.4%. IMEF and others offer similar outlooks; a small minority still predict mild contraction.

INEGI’s breakdown for H1 shows agriculture up 4.6%, services up 1.5%, and industry down 0.8%, pointing to uneven performance.

Analysts cite high interest rates, tight credit, sluggish consumption, and reduced public spending as dampening forces. The real story behind these numbers is straightforward. Mexico has avoided recession, but it has not built momentum.

Growth remains fragile, leaning on exports and foreign investment to hold steady. U.S. trade policy continues to shape outcomes more than internal factors. The economy moves forward in cautious increments, weathering pressures from beyond its borders.

More: Latin America news in English, every day from The Rio Times.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error