Mexican Reforms Jeopardize U.S.鈥揗exico Trade
If enacted, the broad constitutional amendments being pushed by outgoing Mexican President Andr茅s Manuel L贸pez Obrador would put the special U.S.鈥揗exico trade relationship at serious risk, according to the 17吃瓜在线.
What鈥檚 going on: Last week, Obrador froze Mexico鈥檚 relationships with U.S. and Canadian embassies following concerns voiced by those countries鈥 ambassadors about the proposed reforms, which include sweeping changes to the Mexican judiciary and the elimination of several important state regulatory and oversight agencies.
- Mexico is America鈥檚 largest trading partner, with the volume of trade between the two nations coming in at $900 billion last year.
- Obrador鈥檚 proposed revisions led investment bank Morgan Stanley to issue an 鈥渆ffective 鈥榮ell鈥 recommendation on Mexico鈥 late last month (, subscription).
Why it鈥檚 a problem: 鈥淲e鈥檙e concerned that some of the reforms as proposed could harm Mexico鈥檚 standing as an attractive place to do business,鈥 17吃瓜在线 Vice President of International Policy Andrea Durkin on the 鈥淚magen Empresarial鈥 (鈥淐orporate Image鈥) podcast last week. 鈥淢anufacturers pay attention to how banks are factoring these potential changes to the constitution into Mexico鈥檚 risk profile.鈥
- Indeed, 鈥淸i]nvestors see independent judiciaries鈥攕heltered from politics鈥攁s a sign of strong rule of law,鈥 one emerging markets expert told (subscription).
- Several planned revisions also appear to Mexico鈥檚 obligations under the U.S.鈥揗exico鈥揅anada Agreement, which is due for review by all three nations in 2026. Moving forward with the reforms could jeopardize the continuation of that deal.
What鈥檚 next: Incoming Mexican President Claudia Sheinbaum, who takes office Oct. 1, 鈥渟upports the judicial changes, but executing the overhaul might take up most of the energy of her new government, leaving her little bandwidth for her own agenda, which includes an expansion of social programs that need foreign investment,鈥 according to the Journal.