The Shift in Global Economic Order
The World Economic Forum in Davos 2026 confirmed what many countries had intuitively sensed but few dared to articulate clearly: the international economic order is not merely in transition, but undergoing a structural breakdown. Globalization as a political project has lost its universal character and been replaced by a logic of fragmentation, regionalization, and strategic use of trade as an instrument of power. Former Canadian Prime Minister Mark Carney’s speech was the most eloquent moment of this realization. By warning that if countries aren’t at the table, they’re on the menu, Carney gave voice to an uncomfortable reality for middle-income economies: sovereignty is no longer measured by retreat, but by the ability to build resilience, functional alliances, and a unique strategy in an increasingly hostile world.
The U.S. Stance and Its Implications for Mexico
Donald Trump’s reaction in Davos reinforced this interpretation. His intervention made it clear that for the U.S., trade, energy, and security are now inseparable dimensions, and economic agreements will continue to be subordinated to geopolitical objectives. Tariffs, sanctions, and explicit threats are now standard measures in U.S. foreign policy. Secretary of Commerce Howard Lutnick also warned that any deviation by Canada or other partners, such as Mexico, favoring U.S. adversaries like China, would have immediate costs. The message was unequivocal: in the U.S. logic, open trade is conditional, reversible, and subordinated to security and domestic reindustrialization objectives.
This hardened stance not only redefines the rules of the game for Europe and Asia but also presents Mexico with a more demanding strategic dilemma: either leverage its position within the North American block to negotiate from strength and diversify margins, or become trapped in an increasingly asymmetric relationship where market access is negotiated case by case under constant threat.
The Breakdown of Trust Between the U.S. and Europe
The eroding trust between the U.S. and Europe, widely discussed in Davos, marks a turning point with direct effects on Mexico. The question is no longer whether the world is heading towards regional protectionism, but how each country will adapt to this new normal without losing leverage for economic benefit.
For Mexico, the context is particularly complex. The possibility of diversifying its international insertion exists but is limited. Over 80% of Mexico’s exports depend on the U.S. market, and the USMCA remains the cornerstone of its economic model with sophisticated supply chains that have turned Mexico’s economy into a complex network of transactions with advanced economic activities in its most industrialized states, primarily the north and some in the Bajío region.
Strategic Opportunities with the USMCA Review
Despite these constraints, the 2026 USMCA review opens a strategic window that should not be read solely defensively. As an anchor economy in North America, Mexico has the opportunity to redefine its position while updating and deepening underutilized agreements.
While renegotiating the agreement with the European Union, the UK, and participating in the CPTPP could be crucial levers for a Mexican diversification strategy, the reality is that these won’t offset U.S. importance in Mexico’s international trade in the short term. The U.S. is Mexico’s primary partner, given its massive GDP—approximately a quarter of the global GDP—high consumption capacity, service sector dominance (76% of its GDP), and technological-military dominance allowing it to advance politically in negotiations, as seen with Nicolas Maduro’s removal from power in Venezuela earlier this year, accompanied by a strategic petroleum plan with the U.S. private sector.
However, maintaining an open economy can still serve a strategic function: reducing risks, signaling relative autonomy, and expanding Mexico’s bargaining power within the North American block. Davos clarified that new agreements should not merely maximize economic efficiency but also manage political and social dependencies and vulnerabilities.
Implications for Industrial Organization
The shift towards regionalization has profound implications for industrial organization. Relocating production chains will no longer rely solely on cost reduction but also on optimizing security, proximity, and control. This is good news for Mexico if it generates clear investment incentives to foster vertical integration strategies—where a company takes direct control of multiple stages of its supply chain, from raw materials to final distribution—as highlighted by talented economist Luis de la Calle. Particularly in strategic sectors like energy, advanced manufacturing, semiconductors, automotive, pharmaceuticals, and critical minerals, this represents a significant opportunity.
Foreign direct investment is then the primary gauge of this strategy. Capital flows will become more selective and increasingly conditioned by security economic criteria. Mexico competes not only with Asia but also with other countries striving to position themselves as regional hubs with access to markets where they can optimize business profitability. The differentiator is the Mexican state’s ability to articulate a coherent industrial policy aligned with the USMCA but also open to other integration spaces.
Lessons for Latin America
Davos left a crucial lesson for Latin America: in a world where rules are applied asymmetrically, countries without productive, institutional, and energy muscle will be subordinated to others’ decisions. For Mexico, this implies recognizing that USMCA revision is not merely a trade negotiation but a strategic definition exercise. The dilemma isn’t sovereignty versus integration; it’s between passive reaction and strategic ambition.
The message from middle-income economies in Davos is especially pertinent. No one expects the old order’s return. Nostalgia cannot be a strategy. Mexico cannot afford to wait or improvise. Its North American trade block membership gives it a stronger starting position than many developing economies, but this advantage translates into power only if accompanied by a clear vision of how to insert itself in the fragmented new order to attract investment in strategic sectors.
Mexico’s strength lies in its 14 trade agreements with over 50 countries. If leveraged correctly, they can interconnect supply chains.
It’s important to note that the 2026 USMCA review will occur in a much harsher and fragmented international environment than the one that birthed the treaty. The U.S.’s security and trade policy, once again articulated under the “America First” logic, has made it clear that economic interdependence is no longer an end in itself but a tool of power. In this context, Mexico could assume a leadership role in deliberately constructing long-term strategic convenience, transforming the asymmetry with the U.S. from a negotiating liability into an asset.
This approach requires shedding ambiguity. Mexico’s foreign and economic policy cannot remain trapped in a defensive sovereignty discourse that, in practice, reduces negotiating room to address the investment obstacles currently faced. The international situation demands reviewing which Mexican constitutional and legal reforms aren’t working to achieve the growth Mexico needs and daring to adjust or reform them.
The USMCA review, in this sense, is less a technical examination and more a test of Mexico’s strategic maturity. The Canadian example in Davos demonstrates that it’s possible to defend national interests without isolating oneself or renouncing integration. For Mexico, ambition should be twofold: consolidate itself as indispensable industrial partner to the U.S. while diversifying its trade balance and strategic alliances to strengthen relative autonomy with bargaining power against U.S. interests.
In this more ambitious scenario, strategic leadership is crucial to turn interdependence into an advantage for allies. It also involves acknowledging that a strong, integrated, and vocal Mexico is more valuable to the U.S. than a weakened neighbor forced into risky alliances. The USMCA revision could be the moment when Mexico stops reacting to circumstances and starts shaping them towards the medium and long term in a world offering no guarantees but opportunities to those daring enough to seize them.
*The author is the Director of Inteligencia Más and a master’s degree holder in Government and Public Policy from the Universidad Panamericana.
Key Questions and Answers
- What did the World Economic Forum in Davos 2026 confirm? The forum confirmed that the international economic order is undergoing a structural breakdown, with globalization losing its universal character and being replaced by fragmentation, regionalization, and strategic use of trade as an instrument of power.
- How did Donald Trump’s reaction in Davos impact Mexico? Trump’s stance made it clear that trade, energy, and security are now inseparable dimensions for the U.S., with economic agreements subordinated to geopolitical objectives. This presents Mexico with a strategic dilemma, either leveraging its position within the North American block or becoming trapped in an asymmetric relationship.
- What are the implications of the breakdown of trust between the U.S. and Europe for Mexico? The eroding trust between the U.S. and Europe has direct effects on Mexico, prompting the question of how each country will adapt to a new normal without losing leverage for economic benefit.
- How can Mexico take advantage of the USMCA review in 2026? Despite constraints, the 2026 USMCA review offers Mexico a strategic window to redefine its position as an anchor economy in North America while updating and deepening underutilized agreements.
- What are the implications for industrial organization due to the shift towards regionalization? The shift implies that relocating production chains will focus on optimizing security, proximity, and control rather than just cost reduction. This presents Mexico with an opportunity in strategic sectors if it generates clear investment incentives for vertical integration.
- What lessons does Davos hold for Latin America, particularly Mexico? Davos’ lesson is that countries without productive, institutional, and energy muscle will be subordinated to others’ decisions. For Mexico, this implies recognizing USMCA revision as a strategic definition exercise rather than a mere trade negotiation.
