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GENERAL SITUATION IN MEXICO

Weekly Review I December 17, 2025

US - MEXICO PRESIDENTIAL NEWS

U.S.-Mexico Tension Over Water Dispute • Last week ended with renewed bilateral tension between the Mexican and the U.S. government over water deliveries under the 1944 Water Treaty as Trump announced he had authorized documentation to impose a 5% tariff on Mexican products if Mexico “continues failing to comply,” alleging a deficit of nearly one billion cubic meters and setting a December 31st deadline to deliver 246 million cubic meters. U.S. officials and politicians, particularly in Texas, argue that shortages are harming farmers and insist Mexico provide “the maximum possible” volume. • As a response, Mexico maintains it is complying to the extent allowed by severe drought conditions and has proposed a technical plan to U.S. counterparts. The issue adds a new stress point to the bilateral agenda just as both governments prepare for the 2026 USMCA negotiations. SOURCE: BBC

US - MEXICO PRESIDENTIAL NEWS

USMCA Negotiation Processes • U.S. automakers and manufacturers strongly defended the USMCA during USTR’s public hearings, positioning the agreement as essential to U.S. competitiveness ahead of its 2026 review. The American Automotive Policy Council (AAPC) and the National Association of Manufacturers (NAM) argued that the agreement has driven more than USD 210 billion in new U.S. automotive investment and remains the most “pro-American” trade pact in force. • Separately, over 500 U.S. business and agricultural groups urged USTR to preserve the agreement’s core structure and avoid changes that could disrupt regional integration. While most stakeholders support a 16-year extension, analysts warn of uncertainty as the Trump administration signals openness to renegotiating bilaterally or even withdrawing. The private sector is preparing for a contentious review with major implications for North American supply chains. SOURCE: EL FINANCIERO

US - MEXICO PRESIDENTIAL NEWS

Mexico Moves To Shape USMCA Review Through Labor And Investment Alignment • Mexico is intensifying its positioning ahead of the 2026 USMCA review with two parallel fronts: a new labor-dialogue proposal and coordination with global companies on investment and supply-chain policy. • Mexico formally proposed creating a North American Tripartite Labor Dialogue Forum starting in 2026. The mechanism aims to institutionalize continuous engagement and reduce long gaps between formal meetings. The initiative responds to scrutiny from U.S. and Canada that Mexico “is not meeting labor obligations.” • In parallel, Economy Secretary Marcelo Ebrard met with the Council of Global Companies (CEG) to coordinate private-sector positions for the 2026 review. Both sides agreed on three priorities: aligning negotiation stances, accelerating nearshoring investments, and deepening local supplier development. Combined, these steps signal Mexico’s intention to shape the upcoming review through proactive labor diplomacy and tighter coordination with major investors, aiming to reinforce the country’s reliability within North America’s integrated production system. SOURCE: EL ECONOMISTA

LEGISLATIVE CHANGES AND INITIATIVES LABOR • DECREE INITIATIVE TO AMEND ARTICLE 63 OF THE FEDERAL LABOR LAW ON REST PERIODS INSIDE OR OUTSIDE THE WORKPLACE — Presented by: Sen. Andrea Chávez Treviño (MORENA)

— Objective: Mandates that workers in continuous workdays receive at least a thirty-minute break, granting them the choice to take this rest period inside or outside the workplace. The measure aims to strengthen worker autonomy, improve rest conditions, and ensure greater flexibility. — Status: Published in the Parliamentary Gazette on December 10, 2025

PUBLIC ADMINISTRATION • BILL AMENDING VARIOUS PROVISIONS OF THE FEDERAL CRIMINAL CODE — Presented by: Senate — Objective: The bill increases penalties for environmental and environmental-management crimes. It establishes higher prison terms and fines for obstructing authorities, breaking seals, mishandling hazardous substances, polluting federal waters and soils, illegally exploiting vegetation and submitting false environmental information. — Status: Published in the Parliamentary Gazette on December 10, 2025.

LEGISLATIVE CHANGES AND INITIATIVES

TRADE • BILL THAT ENACTS THE GENERAL LAW ON CIRCULAR ECONOMY AND AMENDS ENVIRONMENTAL LEGISLATION — Presented by: Chamber of Deputies — Objective: The bill establishes a national circular

ENVIRONMENTAL • GENERAL LAW ON CIRCULAR ECONOMY AND AMENDMENTS TO ENVIRONMENTAL LEGISLATION

— Presented by: Chamber of Deputies — Objective: The bill establishes a national circular economy framework to extend product life cycles, reduce waste generation, and enhance reuse, recovery, and valorization processes. It defines principles, allocates government responsibilities, creates a national system and planning program, and mandates mechanisms, reporting duties, and oversight tools to strengthen environmental protection. — Status: Approved on December 10, 2025; sent to the Federal Executive.

economy framework to extend product life cycles and reduce waste through reuse, recovery, and valorization. It defines principles, allocates responsibilities across government levels, creates a National System and planning program, and sets reporting, oversight, and producer-responsibility mechanisms to strengthen environmental protection. — Status: Approved on December 10, 2025; sent to the Federal Executive.

• BILL AMENDING ARTICLE 76 BIS AND ADDING A PARAGRAPH TO ARTICLE 85 OF THE FEDERAL CONSUMER PROTECTION LAW — Presented by: Sen. Lorenia Iveth Valles (MORENA)

— Objective: The bill strengthens consumer rights in electronic, optical, or technology-based transactions by guaranteeing free contracting under the principle of autonomy of will. — Status: Published in the Parliamentary Gazette on December 10, 2025.

NEWS BY STATE

BAJA CALIFORNIA Tijuana reinforced its role as one of Mexico’s most competitive industrial hubs in 2025 while deepening binational collaboration with California. The city attracted 15 new companies and recorded 23 expansions, reflecting strong investor confidence supported by greater availability of industrial space, a skilled talent base, and strategic infrastructure such as the Cross Border Xpress and a highly connected airport, even amid uncertainty surrounding the USMCA renegotiation. In addition, Mexican and U.S. institutions launched the Calibaja Higher Education Consortium (CHEC) at UC San Diego to strengthen higher education, innovation, applied research, and academic mobility across the Baja California–California region, enhancing talent-driven value chains and positioning Calibaja as a competitive, sustainable binational platform for industrial growth and investment. SOURCES: INDUSTRIAL NEWS BC, MEXICO INDUSTRY

NEWS BY STATE

CHIHUAHUA Index Chihuahua closed 2025 by strengthening collaboration between industry and academia through its Industry–Academia Liaison Committee, consolidating a strategic platform for dialogue to better align talent development with the state’s productive needs. During the year’s final session, partner universities presented progress on academic programs, relevance surveys, and key projects aimed at improving employability, technical specialization, and curriculum alignment with the manufacturing and export sectors. This ongoing collaboration enhances regional competitiveness by fostering innovation, addressing growing demand for specialized human capital amid industrial transformation and investment relocation, and reinforcing Index Chihuahua’s role as a key connector between the productive and educational sectors to ensure sustainable industrial development in the state. SOURCE: MEXICO INDUSTRY

NUEVO LEON Nuevo León is reinforcing its position as a leading hub for innovation, entrepreneurship, and global connectivity by combining high-impact ecosystem building with expanded international access. The fourday incMTY 2026 festival, taking place March 17–20 in Monterrey, will bring together startups, investors, corporations, universities, and global leaders to accelerate new business models and strategic collaboration, with a strong focus on artificial intelligence and applied innovation across five core pillars. In parallel, the launch of a direct Monterrey–New York (JFK) flight operated by Viva strengthens the state’s international connectivity ahead of the 2026 FIFA World Cup, enhancing access to a major global economic center, boosting tourism and business travel, and positioning Nuevo León as a key international gateway that supports investment attraction, talent mobility, and sustained economic growth. SOURCE: MEXICO INDUSTRY

NEWS BY STATE

TAMAULIPAS Tamaulipas made history by establishing Mexico’s first Electrical–Electronic Cluster in Reynosa, bringing together government, industry, and academia to strengthen innovation, high-tech manufacturing, and integration into global value chains. Led by Governor Américo Villarreal Anaya, the initiative reflects the state’s growing industrial strength and long-term vision for technological development under a triple-helix model that aligns public policy, education, and private enterprise. Supported by the state Ministry of Economy and major industry and academic leaders, the cluster aims to position Tamaulipas as a competitive high-technology ecosystem, fostering collaboration, attracting investment, and supporting sustainable industrial growth, reinforced by the state’s strong manufacturing base and major employers such as Corning Optical Communications. SOURCE: CLUSTER INDUSTRIAL

NEWS BY STATE

SAN LUIS POTOSI San Luis Potosí and Zacatecas signed a collaboration agreement to promote a central-northern economic corridor aimed at attracting larger-scale investments, strengthening regional competitiveness, and enhancing productive integration. The alliance leverages complementary strengths—Zacatecas’ solid mining base and San Luis Potosí’s advanced manufacturing ecosystem, supported by its logistics-automotive cluster and global companies such as BMW and General Motors—to develop more efficient regional supply chains. Focused on sectors including automotive, home appliances, emerging technologies, and value-added mining, the agreement seeks to generate higher-quality jobs, boost export-oriented industries, and position the region as a more competitive platform within North American value chains through coordinated institutional and infrastructure development. SOURCE: MEXICO INDUSTRY

GUANAJUATO Index Guanajuato and the state Ministry of Economy signed a collaboration agreement to strengthen industrial competitiveness and attract investment by expanding access to the IMMEX program for companies operating or establishing operations in Guanajuato. The partnership will provide technical and institutional support to help manufacturers and export-related service companies benefit from IMMEX, which allows the temporary import of inputs, machinery, and equipment to reduce costs and improve efficiency. The agreement also aims to better integrate companies—particularly MIPYMES—into global value chains, boost exports, support job creation, and position Guanajuato as a strategic destination for industrial growth through coordinated public–private efforts. SOURCE: MEXICO INDUSTRY

NEWS BY STATE

MEXICO CITY Capital One is expanding and maturing its end-to-end technology development hub in Mexico City, positioning the country as a strategic innovation center within its global operations. Fully integrated with Capital One’s U.S. platform, the hub develops digital products from design to deployment, leveraging real-time data, artificial intelligence, cloud computing, and advanced analytics that serve more than 100 million customers worldwide. The Mexico City team plays a critical role in addressing complex financial challenges such as fraud detection, data security, and the modernization of core banking systems, while also enabling new digital products and customer experiences. Executives highlighted that Mexico has moved beyond basic IT support and project execution into a third phase of technological development focused on creating scalable, globally impactful solutions. Through continued investment in local talent, Capital One is contributing to Mexico’s evolution into a high-value technology creator and reinforcing its role in the global financial innovation ecosystem. SOURCE: CONTRARÉPLICA

NEWS BY STATE

STATE OF MEXICO Industrial activity in the State of Mexico extended its downward trend, recording five consecutive months of contraction and accumulating seven months of negative performance through August 2025, according to INEGI’s Monthly Indicator of Industrial Activity by State (IMAIEF). The decline is largely driven by persistent weakness in mining, which has failed to recover for over a year, and manufacturing, the state’s main source of formal employment, which also posted five straight months of contraction. Manufacturing remains critical for Edomex, generating more than 584,000 formal jobs, yet continued negative variations are weighing heavily on overall industrial performance. Mining activity remains marginal in employment terms and has further dragged down results. Construction has been the only stabilizing sector, posting growth rates of up to 10.8 percent over the period and preventing a deeper contraction in the state’s industrial output. Overall, Edomex now shows its weakest industrial performance in two years, highlighting growing risks for employment and economic momentum in Mexico’s most industrialized state. SOURCE: MONITOR FINANCIERO

INVESTMENT NEWS NORTHERN MEXICO TATA CONSULTING SERVICES TCS, a global logistics and supply-chain services provider, inaugurated a new office in Monterrey, Nuevo León to accelerate cross-border logistics operations. The office will enhance coordination for air, sea, and ground freight solutions, strengthening supply-chain efficiency for clients across northern Mexico and the US border. CONFICAB Coficab, a global automotive electrical-cable manufacturer, inaugurated its second plant in Durango with an investment of over US$60 million. The facility currently employs nearly 500 workers and is projected to reach up to 2,000 jobs as production lines expand, reinforcing Durango’s role as a competitive hub for advanced automotive supply-chain manufacturing. BUN LAN Bun Lan, a manufacturer of injection-molded plastic components for the automotive and safety industries, inaugurated a new plant in Delicias, Chihuahua with an investment of over US$80 million. The facility will create 150 technical jobs in its first phase and is projected to achieve 50% annual sales growth, strengthening advanced manufacturing and Industry 4.0 capabilities in the region.

INVESTMENT NEWS SMURFIT WESTROCK Smurfit Westrock, a global sustainable packaging manufacturer, announced an US$65 million investment to build a new packaging plant in Ciudad Obregón, Sonora. The facility will feature corrugated, micro-corrugated, and high-graphic folding carton lines and is expected to generate more than 800 direct and indirect jobs, strengthening the region’s packaging supply capabilities. CENTRAL MEXICO NISSAN Nissan, a global automotive manufacturer, began a 120,000 m² expansion of its A1 plant in Aguascalientes to start pickup truck production locally. The project is expected to generate 1,300 direct and 4,000 indirect jobs, reinforcing the state’s role as a key automotive hub. SAFRAN Safran Aero Composite, a unit of the global aerospace equipment manufacturer Safran, began expanding its plant in Querétaro with a US$48 million investment to produce high-precision engine components. The expansion will support around 132 technical jobs and strengthen Mexico’s aerospace supply chain.

KIO KIO Data Centers, a leading provider of digital infrastructure, inaugurated QRO2, its newest data center in Querétaro. The expansion adds 12 MW of capacity—bringing the campus to nearly 19 MW—and strengthens one of Mexico’s most advanced hubs for cloud, AI, and mission-critical workloads. ACTIS Actis, a global infrastructure investor, launched TERRANOVA, a hyperscale data center platform with a US$1.5 billion investment plan over three years. The first campus will be built in Querétaro, Mexico, to serve growing demand for cloud, AI, and mission-critical digital services, with operations expected to begin in early 2026. SOURCES: MEXICO INDUSTRY , CLUSTER INDUSTRIAL

PRODENSA INSIGHTS

PUBLIC SENTIMENT & NEARSHORING: WHY IT MATTERS At the 2025 North Capital Forum, Prodensa CEO Emilio Cadena highlighted how public perception— not just costs or capacity—is shaping nearshoring outcomes in North America. KEY INSIGHTS • Public sentiment is a leading indicator of economic stability, labor engagement, and investment risk • Mexico shows rising optimism around jobs and local economies, supporting workforce attraction and retention • U.S. political polarization increases uncertainty around trade and regulatory policy • Public views in Mexico and Canada reflect pragmatic openness toward global trade partners Bottom Line Nearshoring success depends on understanding both hard data and human sentiment—and aligning strategy with people, policy, and productivity.

PRODENSA INSIGHTS

MEXICO, AI & TALENT: CAPTURING THE NEXT WAVE OF VALUE At the 2025 North Capital Forum, Prodensa CEO Emilio Cadena discussed how Mexico is shifting from a cost-focused manufacturing base to a high-value hub for AI, digital talent, and innovation. KEY INSIGHTS • Mexico is attracting investment in AI, engineering, and agentic technologies—not just manufacturing • Talent is the core advantage, with growing engineering, R&D, and software hubs across major cities • USMCA alignment and IP frameworks support higher-value innovation and technology development • Investors are increasingly viewing Mexico as a place to create intellectual property, not just products Bottom Line Nearshoring is evolving into a race for value. Mexico is positioned to win by combining talent, technology, and North American integration.

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EST. 1985

Prodensa celebrates 40 years of Shaping Industry & Leading the Future for foreign companies operating in Mexico.

Emilio’s MESSAGE Mexico has become an essential pillar of North American competitiveness. As global supply chains realign, our region stands at a defining moment—one where execution, collaboration, and long-term vision matter more than ever. For 40 years, Prodensa has worked to strengthen Mexico’s role in this shared ecosystem, building solutions that connect capability, innovation, and opportunity across borders. In the decades ahead, we will continue elevating Mexico’s strategic value by deepening regional integration, developing talent, and working constructively with federal, state, and city governments to create the conditions and ecosystem needed for investment and sustainable growth. We are entering a new era—one where Mexico is not only a manufacturing partner, but a strategic engine for innovation, resilience, and regional prosperity. Our commitment is clear: to help shape a North America that is stronger, more resilient, and prepared for the future.

EMILIO CADENA

CEO Prodensa

Thank you for being a part of our story and for building The Mexico Journey® with us—our commitment to doing things the right way, elevating productivity, strengthening our region, and creating shared prosperity that endures for generations.

EST. 1985

Prodensa celebrates 40 years of Shaping Industry & Leading the Future for foreign companies operating in Mexico.

Marco’s MESSAGE Reaching 40 years is a moment to honor the discipline, trust, and leadership that shaped Prodensa’s journey. For four decades, we have helped global companies turn ambition into reality in Mexico— building a foundation of knowledge, execution, and reliability that continues to set us apart. Yet this milestone is not just a celebration of the past. It marks a turning point for the region. As North America enters a new era of nearshoring, the demands on manufacturers are becoming more complex: faster decisions, integrated strategies, and business models built for long-term competitiveness. Prodensa is evolving to meet this moment: strengthening our advisory capabilities, refining our operational playbooks, and designing nextgeneration solutions. Everything we are building today is designed to prepare our clients for what comes next.

MARCO KULJACHA

President, Startup & Consulting Prodensa

This is the moment to rethink how companies enter, scale, and operate in the region—and to align strategy with the opportunities emerging across North America. We invite industry leaders, clients, and partners to join us in advancing the reinvention of North American investment for the next 40 years.

EST. 1985

Prodensa celebrates 40 years of Shaping Industry & Leading the Future for foreign companies operating in Mexico.

Alejandro’s MESSAGE Celebrating 40 years of Prodensa means honoring a mindset that has defined us from the beginning: working with honesty, executing with discipline, and trusting our convictions. What matters most from these four decades is not only the projects delivered, but the thousands of jobs created and the communities whose growth we have helped shape. Each investment we’ve supported represents new opportunities for families and meaningful development for regions across the country. Serving as a bridge between global vision and local talent continues to be one of our greatest responsibilities. Prodensa’s longevity is grounded in a simple culture: doing things well, with integrity and positive energy. Looking ahead, we will continue strengthening our capabilities, expanding internationally, and building solutions that prepare our clients [and Mexico] for the future.

ALEJANDRO MENDOZA

President, Real Estate Solutions Prodensa

To our collaborators, clients, and partners: thank you for being part of this journey. This anniversary is both a shared achievement and an invitation to keep building together toward the next 40 years.

EST. 1985

Prodensa celebrates 40 years of Shaping Industry & Leading the Future for foreign companies operating in Mexico.

Rogelio’s MESSAGE For 40 years, Prodensa has contributed to the creation of hundreds of thousands of quality jobs—generating long-term value for companies while transforming the quality of life in communities across Mexico. Over the course of my career, I have seen how meaningful employment can accelerate regional growth: strengthening local businesses, expanding household incomes, and opening pathways that did not exist a generation ago. This rapid transformation is a powerful reminder of what purposeful investment can achieve. As we mark this milestone, our mandate is clear: continue expanding these opportunities and positioning Mexican communities as strategic contributors to North America’s competitiveness. In doing so, we build a more prosperous, resilient, and globally connected Mexico for the decades ahead.

ROGELIO SOTO

General Director, HR Services Prodensa

Thank you to the candidates, hiring managers, and clients for trusting Prodensa as your partner in building meaningful employment opportunities. Together, we are accelerating careers, strengthening communities, and shaping a more prosperous future for Mexico’s workforce.

THANK YOU FOR BEING PART OF PRODENSA’S WEEKLY REPORT THROUGHOUT 2025. We will resume our publications in January 2026, continuing to share timely insights and relevant updates. We extend our best wishes for a restful holiday season and hope you have the opportunity to spend meaningful time with your loved ones.

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Happy Holidays.