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    Published on Tuesday, April 22, 2025

    Mexico | Mexico's tariff puzzle: trickier than it seems

    Summary

    The "Plan Mexico" is emerging as a key initiative to mitigate the tariff shock and reposition the country as an attractive destination for investment. Mexico holds a relatively favorable position among the five largest exporters to the United States, which could revitalize Foreign Direct Investment (FDI) inflows.

    Key points

    • Key points:
    • Under the current tariff framework, Mexican exports to the United States could face a weighted average tariff of up to 23%.
    • To lower Mexico's average tariff, industrial policy should prioritize maximizing the share of exports to the U.S. under the USMCA. This requires increasing the domestic value added to exports. It is encouraging that this is a core objective of Plan Mexico.
    • The government must continue cooperating on migration and fentanyl trafficking issues—areas in which it has made significant progress, even acknowledged by the Trump administration—to enable a reduction of the related tariff from 25% to 12% or even 0% in some instances.
    • It is also essential to continue conveying to U.S. stakeholders—including congressmen, the private sector, and the Trump administration itself—that protectionism against Mexico undermines U.S. competitiveness.
    • Although Mexico currently faces a much higher average tariff than last year, the protectionist stance toward China (facing tariffs above 125%) remains substantially harsher, potentially creating room to attract more investment.

    Geographies

    Authors

    Diego López BBVA Research - Senior Economist
    Carlos Serrano BBVA Research - Chief Economist
    Samuel Vázquez BBVA Research - Principal Economist

    Documents and files

    Report (PDF)

    Mexico | Mexico's tariff puzzle: trickier than it seems

    English - April 22, 2025

    Report (PDF)

    Mexico | Mexico's tariff puzzle: trickier than it seems

    Spanish - April 22, 2025

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