USMCA as a Shield and a Sword: Mexico’s Trade Strategy Under Amador

Mexico’s economy is navigating a precarious balance between leveraging the USMCA agreement to protect its export-driven growth and fending off U.S. trade policy volatility. Finance Minister Edgar Amador has emerged as the architect of this strategy, emphasizing the trade pact’s role as both a shield against tariffs and a tool for long-term economic stability. Here’s what investors need to know.

USMCA Compliance: A Lifeline for Exports

Amador’s central argument is clear: USMCA compliance is the difference between survival and stagnation for Mexico’s exporters. As of April 2025, 51% of Mexican exports to the U.S. qualified for tariff-free treatment under USMCA, shielding them from the 25% penalties imposed on non-compliant goods. This figure is projected to rise by 10 percentage points as firms accelerate their compliance efforts.

The automotive sector, which accounts for 30% of Mexico’s U.S. exports, is a prime example. Companies like Ford and General Motors have ramped up production in Mexico precisely to avoid tariffs, making the country a key beneficiary of USMCA’s rules-of-origin requirements. However, the U.S. still imposes a 25% tariff on non-compliant automotive imports, creating a stark incentive for compliance.

Economic Growth: A Fragile Recovery

Mexico’s economy narrowly avoided a technical recession in early 2025, growing just 0.2% in Q1 after a contraction in late 2024. Yet forecasts remain fractured. The Finance Ministry forecasts 1.5%–2.3% growth for 2025, while the central bank (Banxico) is far more cautious at 0.6%, and Citi economists see a meager 0.1% expansion.

The divergence reflects uncertainty around U.S. trade policies. Amador acknowledges that “everything is on the table” in potential renegotiations, even as President Trump has praised USMCA’s “effectiveness.” This ambiguity creates a risk for investors in Mexican equities, particularly in export-heavy sectors like manufacturing and energy.

Labor Disputes and USMCA Enforcement

The U.S. Trade Representative’s recent invocation of the Rapid Response Labor Mechanism (RRM) against Amphenol Optimize México highlights another layer of risk. The case, which accuses the firm of union-busting tactics, could lead to suspended tariff exemptions for its exports. This underscores the enforcement of labor standards under USMCA—a potential vulnerability for firms failing to meet compliance.

For investors, this signals a need to scrutinize corporate governance and labor practices in Mexican export firms. Sectors like manufacturing, where labor disputes are common, face heightened scrutiny.

Fiscal Discipline and the Peso’s Resilience

Amador has prioritized fiscal consolidation to stabilize Mexico’s public debt, which hit a record 51.4% of GDP in early 2025. This focus, paired with investor confidence in Mexico’s policy framework, has bolstered the peso. Despite U.S. trade threats, the currency strengthened to 19.45 per dollar in April 2025, outperforming peers in Latin America.

Investment Implications

1. Export-Driven Sectors: Automotive, manufacturing, and technology firms with strong USMCA compliance are likely to thrive. Companies like Grupo México (GCIA) and Grupo Carso (ALFA) could benefit from tariff-free exports.
2. Currency Plays: The peso’s stability makes Mexico an attractive destination for dollar-based investors, especially in bonds and equities.
3. Geopolitical Risks: U.S. policy shifts remain a wildcard. Investors should monitor trade negotiations and labor disputes for volatility in sectors like automotive and aluminum.

Conclusion

Mexico’s economy is a study in contrasts: 51% export compliance with USMCA provides a critical buffer against tariffs, yet divergent growth forecasts (0.1% to 2.3%) reveal underlying fragility. Amador’s strategy hinges on accelerating compliance, maintaining fiscal discipline, and weathering U.S. policy uncertainty.

For investors, the opportunities lie in firms that align with USMCA’s rules and benefit from the peso’s resilience. However, the 25% automotive tariffs and labor disputes serve as reminders that Mexico’s growth hinges on navigating both trade agreements and geopolitical tensions.

In this environment, a cautious, diversified approach—focusing on compliant exporters while hedging against peso volatility—could yield rewards. As Amador puts it, “everything is on the table” in U.S.-Mexico negotiations, but for now, USMCA remains Mexico’s best shield—and its sharpest sword.