Understanding the Geopolitical Challenge
With Donald Trump in Washington, Mexico faces a geopolitical dilemma that can only be resolved through pragmatic foreign policy and solid foundations. Trump is not an anomaly; he represents a new economic logic in the US that prioritizes national security over free trade. The rapid changes brought about by Trump’s policies, without a countering political-economic force within the US, highlight this shift.
Two Pillars for a Winning Strategy
Instead of the alarmist reactions sometimes seen in markets, Mexico should develop a strategy based on two pillars:
- Strengthen ties with the economic sector that safeguards the country from political fluctuations in Washington—the automotive industry.
- Redoubling efforts on migratory policy at both borders, particularly the southern border, turning it into a tool for geopolitical stabilization.
Mexico’s Position in the Trade Wars
During Trump 1.0’s tariff wars, numerous companies moved operations from Asia to Mexico. Between 2018 and 2022, US imports of automotive parts from Mexico grew by 35%, while those from China fell by 17%. Two interesting points suggest Mexico might not be among the most affected parties in these tariff wars:
- Mexico’s trade surplus with the US has grown faster annually during the Trump Era (starting not in 2025 but in 2015 when Trump became a global political focal point), along with Vietnam’s. In 2024, Mexico recorded a surplus of $171 billion, while Vietnam had one of $123 billion. Trump’s tariff focus has been more on Asia, with China and Vietnam at the center of the storm.
- If tariffs increase in Mexico’s automotive sector, the US would face rapid inflation. According to a Budget Lab analysis from Yale University, applying a 25% tariff to the automotive sector would raise car prices by an average of 13.5%, equivalent to a $6,400 increase in the average new car price in 2024. The overall price level would rise between 0.3% and 0.4%, resulting in a loss of $500 to $600 per household on average, regardless of car ownership.
Industrial Strategy 2.0
To achieve geoeconomic shielding, Mexico must go beyond nearshoring and implement an industrial strategy 2.0, centered on targeted incentives in key states like Nuevo León, Guanajuato, and Querétaro, aligning with auto manufacturers’ interests in producing near the US market.
Effective Migratory Policy
Parallel to industrial strategy, an effective migratory policy is required. During former US President Joe Biden’s term, border crossings reached 10.3 million people, compared to 1.9 million during Trump’s first term—a 432% increase. This figure fuels the narrative of chaos and strengthens Trump’s political agenda. The lesson is clear: lower migration from Mexico means less pressure on Mexican authorities and more room in the commercial and security agenda.
Recalibrating Mexico’s Migratory Policy
Mexico should recalibrate its migratory policy: controlled migration with a humanitarian focus, regional cooperation, and updating its refugee system. This dual strategy—industrial and migratory—isn’t magical; it’s pragmatic. Mexico already has the foundations; it just needs to reorganize them.
Key Questions and Answers
- What are the two pillars of Mexico’s winning strategy? Strengthen ties with the automotive industry and redoubling efforts on migratory policy at both borders, particularly the southern border.
- How does Mexico’s position look in Trump’s tariff wars? Mexico might not be among the most affected due to its growing trade surplus with the US and potential inflation if tariffs increase in the automotive sector.
- What is Industrial Strategy 2.0? It involves targeted incentives in key Mexican states to attract auto manufacturers and produce near the US market.
- Why should Mexico recalibrate its migratory policy? Lower migration from Mexico reduces pressure on authorities and creates more room in the commercial and security agenda.
