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Weekly Report August 21st, 2026

Hot Topics SECURITY COOPERATION WITH U.S. IN FOCUS AS DEA PRAISES HARFUCH At the International Drug Enforcement Conference (IDEC) in Buenos Aires, Security Minister Omar García Harfuch outlined Mexico’s security strategy, emphasizing a shift from targeting cartel leaders alone to dismantling entire criminal structures, including finances, supply chains, production infrastructure, and distribution networks. He highlighted the destruction of more than 2,700 clandestine drug laboratories, the seizure of millions of liters and kilograms of chemical precursors, and a 51% decline in daily homicides since September 2024. During the event, DEA Administrator Terrance Cole publicly described Harfuch as a “trusted partner” and “good friend of the United States,” underscoring the current level of bilateral security cooperation. The remarks come as Mexico seeks to demonstrate concrete results in combating organized crime and fentanyl trafficking amid ongoing scrutiny from Washington. In addition, less than a day later, federal forces conducted an operation against a CJNG cell linked to Heraclio “El Tío Lako,” arresting nine people, including close relatives of the regional leader, and seizing weapons, explosives, vehicles, and drones; leading to subsequent road blockades. The incident highlights the persistent security challenges facing Mexico and Harfuch’s strategy, particularly in regions where criminal groups continue to challenge government authority and affect economic activity. Source: EL ECONOMISTA, EXPANSIÓN, EXCELSIOR

SHEINBAUM AND USMCA REVIEW

CARNEY

DISCUSS

President Claudia Sheinbaum and Canadian Prime Minister Mark Carney discussed developments affecting North American trade and the USMCA during a bilateral conversation on August 20th. According to the Canadian government, both leaders emphasized the importance of renewing the agreement as soon as possible to provide greater certainty to businesses and workers across the region. The discussion also covered progress in crossborder trade between Mexico and Canada and the importance of maintaining close bilateral coordination on issues affecting North American economic integration, while the leaders agreed to maintain close communication. For Mexico, closer coordination with Canada could strengthen a trilateral approach to preserving the agreement and reinforcing regional supply chains, particularly as Washington considers changes to the trade framework. Sources: EL HERALDO

STATES SIGN NATIONAL PACT FOR DIGITALIZING GOVERNMENT PROCEDURES Mexico’s Agency for Digital Transformation and Telecommunications (ATDT) coordinated the signing of a National Pact with all 32 states and municipalities across the country to implement the National Law to Eliminate Bureaucratic Procedures. The agreement, signed during the August 18–21 National Meeting on Simplification, establishes a common framework to simplify, standardize, and digitalize government procedures nationwide. The pact includes 10 commitments aimed at implementing a Unified Catalog of Procedures comprising 300 state and 100 municipal procedures. The National Model for Standardizing Procedures and Services will establish common standards for requirements, processing times, and procedures, while preserving the legal competencies of each level of government. The model also promotes the sharing of public-sector technological solutions through a National Technology Solutions Portfolio and Repository. Greater standardization and digitalization could reduce compliance costs, processing times, and uncertainty when interacting with different government authorities, potentially improving Mexico’s overall business environment. Sources: AGENCIA DE TRANSFORMACIÓN DIGITAL Y TELECOMUNICACIONES

Hot Topics MEXICO SEEKS TO STRENGHTEN INVESTMENT TIES WITH INDIA Secretary of Economy, Marcelo Ebrard, and Altagracia Gómez Sierra, Coordinator of the CADERR, met with Indian business representatives to discuss opportunities to strengthen bilateral trade, investment, digitalization, and startup development. The meeting comes amid growing economic ties between both countries, with bilateral trade exceeding $11 billion in 2025 and reaching $6.6 billion during the first half of 2026. The discussions also addressed growing interest among Indian companies in expanding their presence and investing in Mexico. Sources : MILENIO

TRANSSHIPMENT CONCERNS PRESSURE TO USMCA REVIEW

ADD

On August 13, the White House published “The Great Transshipment Scam,” a report examining the global use of third countries to circumvent U.S. tariffs on Chinese goods and identifying Mexico among more than 40 countries and trading blocs exposed to this risk. Mexico receives particular attention because its preferential access to the U.S. market under the USMCA could make it an attractive route for Chinese goods seeking more favorable tariff treatment. However, transshipment and legitimate nearshoring are not equivalent: Chinese components can be legally imported, transformed in Mexico, and incorporated into exports when applicable rules are met. Trade data provide limited support for a generalized transshipment hypothesis. Between 2024 and 2025, U.S. imports from China fell by $131.7 billion while imports from Mexico increased by $31.2 billion; meanwhile, Mexico’s imports from China rose by only $3.8 billion. The findings suggest Washington’s concerns may warrant targeted traceability mechanisms rather than broad restrictions. This distinction could become increasingly relevant during the USMCA review, particularly as the U.S. considers stricter rules-of-origin enforcement. Source: IMCO

CONCAMIN ENGAGES ECONOMY MINISTRY ON IMMEX 4.0 CONCAMIN President Alejandro Malagón Barragán met with Economy Ministry Undersecretary for Industry and Trade Ximena Escobedo to discuss the government’s work on IMMEX 4.0 and the manufacturing sector’s proposals. The meeting also included María Idalia Salgado, Director General of Trade Facilitation and Foreign Trade; José Trinidad Vivanco, Trade Facilitation Coordinator; Judith Garza, Chair of CONCAMIN’s Foreign Trade Commission; Thelma Camacho, Vice Chair of the Commission; and Prodensa’s CEO Emilio Cadena. The discussions signal continued dialogue between the private sector and the government as Mexico advances changes to the IMMEX framework. Sources: X: CONCAMIN

SAT DEFENDS TAX AUDIT PRACTICES AGAINST US COMPANIES Mexico’s Ministry of Finance (SHCP) and Tax Administration Service (SAT) issued a statement on August 15 responding to media reports alleging that U.S. companies have faced harassment by Mexican tax authorities. The statement follows concerns raised by the National Foreign Trade Council (NFTC) regarding tax enforcement practices affecting multinational companies operating in Mexico. The authorities highlighted a recent “reengineering” of tax audits, including limiting taxpayers to one audit at a time, reviewing samples rather than 100% of records, and prioritizing high-risk activities such as fraudulent invoicing schemes. The SAT also reported a 25% reduction in the processing and further addressed concerns over VAT credits, related-party deductions, tax dispute guarantees, real-time access to platform information, Advance Pricing Agreements (APAs), and marketplace tax withholding. It emphasized that these measures comply with domestic law and international tax treaties. Sources : SECRETARÍA DE HACIENDA

Legislative and Regulatory Issues: LABOR

ECONOMIC

Agreement Establishing Simplification Actions for Procedures Carried out Before the Secretariat of Labor • Presented by: Secretariat of Labor and Social Welfare • Objective: Provide an opportunity to ensure that procedures and services carried out before the Secretariat of Labor and Social Welfare clearly specify requirements, response deadlines, and resolution times, while reducing bureaucratic costs, avoiding contradictions and duplications, and promoting greater efficiency and benefits for users. • Status: August 21, 2026 – Exemption from Regulatory Impact Analysis

Agreement Reforming Provisions of The Guidelines for Granting Tax Benefits to Taxpayers Conducting Productive Economic Activities Within the Development Poles for Well-being of the Isthmus of Tehuantepec • Presented by: Secretariat of Finance and Public Credit • Objective: Provide greater legal certainty to taxpayers interested in obtaining the tax benefits and administrative facilities derived from investments made in the Development Poles for Well-Being of the Isthmus of Tehuantepec. • Status: August 19, 2026 – Published in the Official Gazette of the Federation

Agreement Establishing Simplification Actions for Procedures Carried Out Before the Center for Labor Conciliation • Presented by: Federal Center for Labor Conciliation and Registration • Objective: Enable the use of digital tools or means to carry out procedures and services; establish response periods shorter than the maximum legally established; extend the validity of resolutions; eliminate requirements and bureaucratic costs. • Status: August 19, 2026 – Published in the Official Gazette of the Federation

ENVIRONMENTAL Initiative with Draft Decree Issuing the General Law of Ecological Balance and Environmental Protection • Presented by: Deputy Óscar Bautista Villegas (SLP - PVEM) • Objective: Abrogate the General Law of Ecological Balance and Environmental Protection and establish a comprehensive framework for environmental prevention, liability, integral remediation of environmental damage, restoration, compensation, and sanctions for environmental harm. • Status: August 19, 2026 Published in the Parliamentary Gazette. Note: Mexico’s Congress is currently in recess; only the Permanent Commission of the Mexican Congress remains active. The ordinary session will resume on September 1st.