Mexico's newly elected president, Claudia Sheinbaum, is expected to have a significant impact on the manufacturing sector and its relationship with the United States. During the administration of outgoing President Andr茅s Manuel L贸pez Obrador (AMLO), Mexico experienced rapid growth and enhanced trade in North America. The manufacturing sector played a crucial role in Mexico's economic success, with sustained growth in manufacturing GDP. Nearshoring, in particular, has been instrumental in this growth, attracting investment to Mexico. Foreign direct investment (FDI) in the manufacturing sector increased from $16.6 billion in 2019 to $18.11 billion in 2023. The United States-Mexico-Canada Agreement (USMCA) has also been a key factor in Mexico's manufacturing growth, allowing the country to surpass China as the leading auto parts exporter to the United States [435652bf].
Claudia Sheinbaum, the new president-elect, has expressed her commitment to maintaining and strengthening support for the manufacturing sector and its relationship with the United States. Sheinbaum recognizes the importance of foreign investment and the relocation of production chains as opportunities to improve social welfare in Mexico. She plans to continue the energy transition, promote renewable energy and energy efficiency, and enhance industrial parks and wellness poles across the country. While there may still be unknowns and challenges, it is not expected that there will be significant changes in the short- and medium-term for manufacturing development in Mexico [435652bf].
Mexican President Andr茅s Manuel L贸pez Obrador has warned that the United States could implement economic "adjustment policies" following the November US presidential election, which may impact Mexico. Obrador aims to "shield" the Mexican economy and public finances to ensure his successor Claudia Sheinbaum has ample room to maneuver. Mexico is one of the United States' major trading partners, and in 2023, Mexico's GDP grew by 3.2 percent [6268fb0c].
The recent political coalition formed by Claudia Sheinbaum and Mexican President Andr茅s Manuel L贸pez Obrador (AMLO) leaves Mexico's opposition in a weak position. If the coalition gains a legislative supermajority, it could lead to the erosion of democratic institutions. The U.S., as Mexico's largest trading partner and investor, must play a role in protecting Mexico's democratic institutions and liberalized economy. However, the Biden administration's approach towards Mexico has not effectively addressed these concerns. The U.S. should establish clear redlines and strengthen cooperation with Mexico on security and investment. Failure to do so could result in a less cooperative Mexico aligning more closely with China [f3b87d0c].