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GENERAL SITUATION IN MEXICO

Weekly Review I June 11, 2025

US - MEXICO PRESIDENTIAL NEWS

US Steel Tariff Hike & China De-escalation

Background: • Tariff hike: On 4 Jun 2025 Washington doubled Section 232 duties on steel and aluminum to 50 % ad valorem for every trading partner except the U.K. (25 %), citing security grounds. • 90-day truce with China: A 12 May accord cut most bilateral tariffs to 30 % (U.S.) / 10 % (China) for 90 days and launched technical working groups; steel and aluminum remain excluded. • Talks resume: U.S. Treasury Secretary Scott Bessent, USTR Jamieson Greer and China’s Vice-Premier He Lifeng opened follow-up negotiations in London on 9 Jun, focusing on critical minerals and tech export curbs.

Expected Impact on Prices and Consumers: • The 50 % duty lifts landed costs of imported steel by roughly 15-20 %, pressuring prices for autos, appliances, canned foods and construction materials. • Retailers note that any relief from cheaper China-sourced electronics during the truce will be largely offset by the higher metal content costs, producing uneven effects at checkout counters • The Congressional Budget Office (CBO) estimates the total tariff package will add about 0.4 pp to U.S. CPI in 2025-26, with metals contributing roughly a quarter of that bump. • Analysts warn that if the 90-day pact lapses and tariffs snap back to triple-digit levels, a fresh priceshock cycle could follow.

US - MEXICO PRESIDENTIAL NEWS

Effects on Inflation and Economic Growth: • CBO projects steel duties alone will push core PCE inflation up ≈0.10 pp in H2 2025, while the China reprieve could shave 0.20-0.30 pp—net disinflation depends on the truce being extended. • Real GDP growth is expected to lose ≈0.06 pp annually from the tariff mix; failure of negotiations could drag it below 1.5 %. • A renewed tariff spike would force the Federal Reserve to weigh slower growth against stickier inflation when setting rates.

International Reactions and Trade Tensions: • Canada labeled the hike “illegal” and is weighing targeted retaliation on U.S. agriculture and consumer goods; Mexicosignaled mirror duties if no exemption emerges. • The European Union cautioned that the move heightens uncertainty and hinted at counter-measures if talks stall. • ASEAN exporters—beneficiaries of prior U.S.–China tensions—now fear reduced investment inflows should the bilateral truce evolve into a broader settlement. • The U.K.’s special 25 % steel rate will be revisited on 9 July 2025; alignment to 50 % or conversion to a quota could set a precedent for future ally carve-outs.

Impact on the Automotive Industry and Global Supply Chains: • Automakers face steel-input inflation of US $70-120 per vehicle, squeezing margins or prompting sticker-price increases; Mexican plants must recalibrate USMCA content ratios due to pricier cross-border steel. • Companies that already nearshored metal sourcing to Mexico or ASEAN after earlier tariff waves will keep those footprints, but the new 50 % levy raises costs inside USMCA as well. • Semiconductor, EV-battery and other high-tech supply chains remain outside the tariff reprieve, sustaining pressure to diversify away from single-country dependencies.

SOURCE: REUTERS

US - MEXICO PRESIDENTIAL NEWS

LA Protests to have posible implications for Mexico Implications

Background: • Massive protests erupted in Los Angeles following federal immigration raids and the deployment of over 2,000 National Guard troops and 700 Marines under President Trump’s invocation of the Insurrection Act. • While some right-wing figures described protesters as “invaders,” the demonstrations have remained largely peaceful, led by immigrant rights groups and civil society organizations demanding an end to militarization and the criminalization of migrant communities. • Mexican President Claudia Sheinbaum condemned the violence, defended the right to peaceful protest, and rejected claims that Mexico was encouraging unrest.

• These developments could have significant implications for U.S.–Mexico relations, particularly in trade. • Heightened political tension may embolden Trump to revisit punitive trade measures, especially tariffs. • Mexico remains vulnerable to U.S. tariff threats on key exports like autos and steel, particularly if the U.S. administration frames border unrest as a national security issue. • While the USMCA offers partial protection, it does not shield all sectors, and Trump has shown a willingness to bypass trade norms in pursuit of political objectives. • The protests may thus indirectly affect the stability of the USMCA, increasing pressure on Mexico to demonstrate control over migration while defending its economic interests. • Sheinbaum’s response so far signals a careful diplomatic balance between sovereignty, domestic stability, and trade cooperation.

SOURCE: REUTERS

LEGISLATIVE CHANGES AND INITIATIVES FINANCIAL • BILL TO AMEND ARTICLE 22 OF THE FEDERAL FISCAL CODE REGARDING TAXPAYER REFUNDS — Presented by: Deputy Noemi Berenice Luna Ayala (Proportional Representation – PAN) — Objective: Reduces the time frame for taxpayer refunds issued by the SAT (Tax Administration Service) to 20 business days. — Status: 2025-06-04 – Published in the Parliamentary Gazette

ENVIRONMENTAL • INITIATIVE TO REFORM THE GENERAL LAW OF ECOLOGICAL BALANCE AND ENVIRONMENTAL PROTECTION REGARDING SUSTAINABLE INDUSTRIAL RELOCATION — Presented by: Deputy Amparo Lilia Olivares Castañeda (Nuevo León – PAN) — Objective: Establishes sustainable industrial relocation by defining green industrial parks and exclusion zones, mandating high-impact industries to relocate within one year, and creating a National Sustainable Industrial Relocation Fund to support and finance the process. — Status: 2025-06-04 – Published in the Parliamentary Gazette

TRADE • INITIATIVE ON IMPORTED PRODUCTS — Presented by: Deputy Hilda Araceli Brown Figueredo (Baja California - MORENA) — Objective: Information about imported products shall display their country and/or place of origin in a visible location on the products, as well as on the price tags in commercial establishments. — Status: 2025-06-04 – Published in the Parliamentary Gazette

LABOR • BILL TO AMEND THE FEDERAL LABOR LAW REGARDING ADMINISTRATIVE DIGITALIZATION FOR TRAINING AND INSTRUCTION — Presented by: Senator Miguel Márquez Márquez (Guanajuato – PAN) — Objective: Establishes that employers, their joint training commissions, institutions, schools, specialized organizations, and certified instructors must fulfill their training obligations and conduct related procedures through a digital platform managed by the Ministry of Labor and Social Welfare. — Status: 2025-06-04 – Published in the Parliamentary Gazette

NEWS BY STATE

BAJA CALIFORNIA To strengthen Tijuana’s competitiveness as a strategic destination for foreign investment, DEITAC (Desarrollo Económico e Industrial de Tijuana) reaffirmed its commitment to integrating artificial intelligence (AI) into the manufacturing sector during its recent bimonthly meeting themed “The AI Revolution in Export Manufacturing.” With speakers like Hugo Cen, co-founder of AI Lab School, and AI engineer Abelardo Flores, the event highlighted AI’s role in optimizing inventory management, quality control, talent training, and strategic decision-making. DEITAC President Adriana Eguía emphasized that AI empowers rather than replaces workers, stressing the need for upskilling to fully leverage AI’s capabilities. As around 30% of global companies already use AI, DEITAC is surveying its members’ familiarity with the technology to support a smooth digital transition. The organization aims to foster a culture of innovation, address the barriers of technical training and budgeting, and ensure Tijuana remains a leader in smart manufacturing and a hub for foreign investment. SOURCE: INDUSTRIAL NEWS BC

SONORA During the Industrial Parks and Warehouses Expo, Eduardo Fraind, Commercial Director of Red River Industrial Park, presented this large-scale project located in San Luis Río Colorado, Sonora, near the Arizona border and just kilometers from Yuma. Spanning 2,600 hectares, the park aims to become a major industrial hub serving key U.S. Southwest markets by offering lower production costs and proximity to the U.S. Fraind explained that the long-term development will unfold over two decades, with some areas becoming operational earlier. The park is designed to host industries such as automotive, pharmaceutical, logistics, and manufacturing, and will include energy generation for internal use and export. Positioned to attract international investment, the Red River Industrial Park aspires to be a regional development engine and a strategic bridge between Mexican industry and global markets. SOURCE: MEXICO INDUSTRY

NEWS BY STATE

CHIHUAHUA The government of Chihuahua has confirmed its participation in the 2025 Paris Air Show, aiming to attract foreign direct investment and promote the state as a hub for advanced manufacturing and high-tech industries. From June 16 to 22, the Chihuahua delegation will meet with aerospace companies to highlight the state’s industrial strengths, including a skilled workforce of over 17,000, technical training centers, and a robust supply chain. Led by state officials and industry leaders, the group will also explore trends in electric aviation, autonomous technologies, and sustainability. The event will host over 2,500 exhibitors from 48 countries and approximately 300,000 visitors. SOURCE: MEXICO NOW

NUEVO LEON The Global Transportation & Innovation Summit (GTI 2025) kicked off in Cintermex with a strong focus on nearshoring, industrial automation, and decarbonization of transport, bringing together key players from Mexico’s automotive, logistics, and tech sectors. Highlights included BYD’s commitment to electric mobility and infrastructure investment, calls for regulatory clarity, and the promotion of regional value chains. Discussions centered on Mexico’s industrial policy and its nearshoring potential, with Nuevo León leading in local supplier integration and innovation, exemplified by KIA’s advanced robotics and dual education programs. ANPACT addressed the urgent need to modernize heavy transport fleets, proposing diverse clean technologies and fiscal support. New logistics and industrial projects were announced, along with Mexico’s first humanoid robot plant, positioning Nuevo León as a strategic hub for sustainable, high-tech manufacturing and global mobility leadership. SOURCE: CLUSTER INDUSTRIAL

NEWS BY STATE

GUANAJUATO From June 11 to 12, León, Guanajuato hosted the first edition of Road 2 Logistics Automotive 2025, bringing together over 200 key automotive suppliers to strengthen collaboration within the supply chain. Officials emphasized León’s strategic role in the autoparts sector and highlighted logistics as critical for competitiveness, nearshoring opportunities, and economic development. The event featured panels on intermodality, sustainability, automation, risk mitigation, and digitalization. Guanajuato’s logistics sector contributes 7.1% of the state GDP and employs over 51,000 people. With more than 250 specialized logistics providers and 150 automotive logistics directors attending, the summit served as a key platform for networking, strategic dialogue, and future partnerships. SOURCE: LIDER EMPRESARIAL

QUERETARO Amazon Web Services (AWS) has recognized Querétaro as a strategic hub for technological development in Mexico, citing its dynamic economy and favorable conditions for innovation and business growth. During an institutional visit, AWS Global VP of Data Center Operations Sergio Loureiro emphasized the importance of collaboration with local stakeholders to expand infrastructure in the region. Joined by key executives, Loureiro highlighted Querétaro’s competitive environment, which aligns with AWS’s goals for digital transformation and data sovereignty. The company recently launched its “AWS México (Central)” region in Querétaro, backed by a $5 billion investment—one of the largest cloud infrastructure projects in Latin America. This move underscores a broader regional trend of tech sector growth driven by skilled talent, strong connectivity, and economic stability. SOURCE: MEXICO INDUSTRY

NEWS BY STATE

STATE OF MEXICO

CDMX At the 2025 Real Estate Show, Mexico City Mayor Clara Brugada highlighted the progress of the Ventanilla Única de Construcción, an initiative aimed at streamlining construction project approvals. In just four months, 50 projects have been reviewed and 32 approved, resulting in approximately 4,000 new housing units. The project involves an investment of 20 billion pesos and aims to speed up bureaucratic processes to boost urban development. Brugada emphasized the need for legal, sustainable, and inclusive growth, viewing real estate as a key driver of economic progress and social equality. She encouraged investor confidence, assuring them of transparency, legal certainty, and affordable housing strategies. Brugada also invited stakeholders to help build a modern city capable of hosting major international events, such as a global football championship, and offering an attractive destination for over five million visitors. The initiative supports the vision of a more dynamic, fair, and globally recognized capital city. SOURCE: QUADRATIN

World Group México is expanding its industrial footprint across five states, with a strong focus on the State of Mexico. The company currently operates 15 industrial parks in key areas like Cuautitlán, Tultitlán, and Tlalnepantla, which serve mainly as distribution hubs for international firms, including a growing number of Chinese companies. A new park is also being developed in Tepotzotlán. Through its main division, World Park México, the company is building parks in Guadalajara and Monterrey, aiming to meet rising demand in logistics, transport, and cosmetics. Construction takes 8–10 months, enabling fast response to market needs. Sixty percent of its tenants are Mexican companies, while 40% are foreign, reflecting Mexico’s strategic appeal. Beyond industrial parks, World Group also engages in packaging solutions and real estate development. CFO Elías Tussie emphasized the company’s commitment to supporting Mexico’s economic growth by offering high-quality infrastructure in strategic locations to attract domestic and foreign investment. SOURCE: MEXICO INDUSTRY

INVESTMENT NEWS CENTRAL MEXICO WASION Wasion MX, a leader in smart energy solutions, has opened an electric-transformer manufacturing plant at Centro Industrial Guanajuato in Irapuato. The new facility represents a US $7.3 million dollars investment and will create 250 jobs. EL CALVARIO The new facilities of Productos Avícolas “El Calvario” have been inaugurated in Tlaxcala. Backed by a 65.6 million dollars investment of Mexican capital, the poultry plant will produce 2.3 million eggs per day and create 300 jobs in its first phase, bolstering the region’s economy. NATURGY As part of its global growth strategy, Bühler Group has commenced construction of a new manufacturing facility at the Amistad Laguna Industrial Park in Coahuila, Mexico. This $52 million dollars investment, the outcome of three years of planning, is expected to generate 200 direct jobs and underscores the company’s commitment to strengthening its operations in Latin America. NORTH HUMANSCALE Humanscale, a global leader in ergonomic office furniture, has announced a nearly US $30 million dollars expansion of its Nogales operations. The project will create more than 300 skilled jobs.

SOUTH HEINEKEN Heineken Mexico has announced a $2.75 billion dollars investment in the country, including the construction of a new brewery in Kanasín, Yucatán, which will generate more than 3,000 direct and indirect jobs. SOURCES: MEXICO INDUSTRY, EL ECONOMISTA

PRODENSA INSIGHTS THE MEXICO JOURNEY®: A STRATEGIC GUIDE TO THRIVING IN NORTH AMERICA Setting up manufacturing operations in Mexico involves more than just site selection—it requires a strategic roadmap. This blog introduces The Mexico Journey®, Prodensa’s proprietary framework designed to guide companies through every stage of expansion, from initial planning and legal structuring to operations launch and long-term optimization. With nearshoring gaining momentum, the framework helps manufacturers navigate regulatory complexities, align supply chains, and scale sustainably in North America. Whether you’re new to Mexico or expanding your footprint, The Mexico Journey® offers a proven path to success.

AEROSPACE INNOVATION AND THE STRATEGIC VALUE OF THE USMCA CERTIFICATE North America’s aerospace sector is evolving fast—and the USMCA plays a critical role in its competitiveness. This blog explores how innovation, supply chain resilience, and skilled labor are driving growth across Mexico, the U.S., and Canada. It also explains why understanding and leveraging the USMCA Certificate of Origin is essential for aerospace manufacturers looking to maximize tariff benefits and maintain compliance. With demand rising and technology advancing, the blog outlines how strategic trade knowledge can give aerospace companies an edge in a highly regulated, high-value industry.

VISIT OUR WEBSITE TO EXPLORE OUR FEATURED BLOG POSTS, EBOOKS, AND CASE STUDIES. PRODENSA.COM/INSIGHTS