Trump’s Victory and Mexico’s Need for Commercial Diversification
While political analyses of this result dominate the headlines, the impact in Mexico extends beyond mere news and quickly transforms into economic and commercial concern. As is customary every four years, the future economic landscape of Mexico is once again suspended on a long and tenuous thread of uncertainty.
In the words of journalist Mauricio Hernández Cervantes, “when 80% of exports depend on a single client, as is the case with Mexico and the United States, everything runs smoothly when the waters are calm, but with the slightest ripple, the macroeconomy falters, and relations become strained”. Today, with Trump back in the White House, that “slight ripple” has turned into a potential storm, and the new administration’s trade and immigration policies are already creating shockwaves that Mexico cannot afford to ignore.
What Does Trump’s Reelection Mean for the Mexican Economy?
The commercial relationship between Mexico and the United States remains one of the most intense worldwide, with Mexican exports to its northern neighbor surpassing $78.287 billion in just the first two months of the year. Yet, Mexico’s economic dependence on the United States has become a double-edged sword. The critical question is not whether there will be consequences under Trump’s renewed leadership but how Mexico can safeguard itself from these fluctuations and the inherent political uncertainty.
Recent history offers clear examples of what is at stake. During his first term, Trump threatened to withdraw from the USMCA (United States-Mexico-Canada Agreement) and imposed punitive tariffs in key sectors. His strict immigration and protectionist economic policies aimed to shield American companies and unions, often to Mexico’s detriment. With this backdrop, Mexico faces the urgent need to rethink its trade strategy and explore alternatives to reduce its overreliance on its northern partner.
Spain: A Viable Diversification Opportunity
Against this backdrop, the relationship with Spain, and by extension, the European Union, emerges as a strategic and viable option. As Hernández Cervantes notes, the ties between Mexico and Spain run deep, encompassing not only economic but also historical, cultural, and diplomatic dimensions. “What happens in Spain matters in Latin America, and what happens in Latin America matters in Spain,” stated Mexican writer Carlos Fuentes.
Economically, Mexico has already started looking across the Atlantic. Over the past decade, Mexican investments in Spain have reached unprecedented levels. In 2022, 60% of all investment capital from Latin America in Spain came from Mexico, with major companies like Grupo Bimbo, Cemex, and Grupo Modelo expanding their footprint in key Spanish sectors.
The Advantages of Diversification
Commercial diversification would not only provide Mexico with greater economic stability but also serve as a safety net against protectionist policies in Washington. Spain, as the gateway to the European Union, presents a market of over 400 million consumers, offering vast, untapped potential.
But the benefits wouldn’t be one-sided. Spain could also leverage Mexico’s privileged relationship with the United States to gain easier access to the North American market. Additionally, the more than 7,000 Spanish companies already operating in Mexico would have greater incentives to strengthen their presence, knowing that Mexico seeks to build more balanced and less U.S.-dependent relationships.
Legal Challenges and Considerations
From a legal perspective, strengthening ties with Spain and the EU brings both challenges and opportunities. Mexican companies must consider European regulatory implications, from complying with the General Data Protection Regulation (GDPR) to adapting to environmental and labor standards. Conversely, bilateral agreements between Mexico and Spain, as well as investment treaties, provide a robust legal framework that facilitates trade and investment.
Our firm is ready to assist Mexican and foreign companies in this transition, offering strategic legal counsel to maximize the benefits of diversification. Our expertise in international and commercial law allows us to guide our clients through the complexities of transatlantic trade and investment.
The Path Forward
Hernández Cervantes’ statement resonates now more than ever: “Perhaps it is time for the old saying that ‘when the United States catches a cold, Mexico gets pneumonia’ to become a thing of the past”. The key to achieving this, as the author suggests, may lie across the Atlantic. Yet, transitioning to a more diversified commercial model will not be easy and will require careful planning and strategic collaboration.
With Trump back in power, the question is not whether Mexico should diversify but how and when it will do so. We are experts in the internationalization of projects. If you wish to discuss how our firm can help you seize these opportunities in Spain and the EU, please do not hesitate to reach out to us.
Author: Ramiro de Iturralde
