Overview of Investment Trends
In the first half of 2025, Foreign Direct Investment (FDI) to Mexico’s automobile and truck production plummeted by 41%, reaching $3,592 million. Simultaneously, FDI in the automotive parts manufacturing sector declined by 24.6%, totaling $1,232 million.
These figures are preliminary data recorded by Mexico’s Secretariat of Economy, comparing the first half of 2025 with the same period in 2024.
Context and Relevance
Gabriel Padilla, General Director of the Mexican National Association of Auto Parts (INA), highlighted uncertainty stemming from US tariff policy turbulence and global economic slowdown as factors behind the reduced FDI inflows.
Padilla mentioned that INA decided against providing FDI projections for 2025 and 2026 due to the prevailing cautiousness. However, he anticipates a rebound in 2027 following the expected resolution of Mexico-US tariff negotiations and a review of the Mexico-US-Canada Agreement (T-MEC).
Future Expectations
Padilla foresees a trend he calls “New Shoring 2.0,” focusing on high-tech parts and components, especially those related to the electric vehicle market.
Impact of Uncertainty on Global Trade
According to a recent report by the United Nations Conference on Trade and Development (UNCTAD), businesses often react to uncertainty by adjusting shipments, renegotiating contracts, or expediting deliveries in anticipation of potential tariff increases.
This behavior results in more erratic trade patterns. In early 2025, fluctuations in shipments entering the US escalated dramatically, illustrating this commercial instability.
The maximum volatility in imports preceded the official implementation of new tariffs in April 2025. Following their enforcement, import volatility decreased.
Benefits of Trade Agreements
UNCTAD asserts that participation in trade agreements can safeguard economies from policy uncertainty by setting standards and dispute resolution mechanisms, thus reducing the risk of sudden policy changes at both national and international levels.
Companies operating within regional or bilateral frameworks typically encounter fewer disruptions and enjoy greater confidence for long-term investments, even amid global political volatility.
