Trade Threats Dim Mexico’s Economic Pulse

BBVA bank reveals Mexico’s private consumption will prop up the economy in 2025, though less than in 2024. Uncertainty from U.S. trade policies under President Donald Trump, who began his second term in January 2025, drives this cautious outlook.

The group projects a modest 1.0% growth, unchanged until Trump’s tariff plans clarify. Construction and manufacturing jobs vanish as major projects from ex-President Andrés Manuel López Obrador’s 2018-2024 term wrap up.

This loss drags down household spending, already stalling by February 2025, amid fears of 25% U.S. tariffs. Trump pushes these levies, claiming Mexico fails to stop drugs and migrants crossing borders.

Consumer confidence slides, and real wage growth slows, reflecting a weary industrial sector tied to U.S. markets. Mexico’s economy, Latin America’s second largest, grows just 1.5% in 2024, down from 3.3% in 2023, with a 0.6% drop late last year.

Mexico Faces Economic Uncertainty Amid Tariff Threats

Exports, mostly to the U.S., fuel 30% of GDP, making tariff threats a heavy blow. President Claudia Sheinbaum, in office since October 2024, tightens spending to curb deficits, limiting government aid.

Inflation hovers at 4.4%, and the peso may hit 21.50 per dollar, adding pressure on wallets. Still, Sheinbaum pitches new manufacturing and energy projects to lure foreign cash.

Experts warn tariffs could shrink GDP by 1.3% in 2025, risking recession after a shaky 2024 finish. The central bank slashes its forecast to 0.6%, eyeing U.S. moves.

Yet, some see hope—Mexico might outshine China, facing steeper 60% tariffs, keeping factories humming near the border. Behind the numbers lies a nation bracing for impact.

Families feel the pinch as jobs fade and prices climb, while businesses weigh risks. Consumption, powering nearly 70% of GDP, falters under this strain. Clarity on Trump’s plans remains elusive, leaving Mexico to balance resilience with looming disruption in a pivotal year.