Mexico

Mexico exemplifies the paradox of geographic mutualism under strain—the world's most integrated manufacturing relationship with the United States now operates under 25% tariffs on non-USMCA goods while record FDI still flows southward. In 2024, Mexico produced nearly 4 million vehicles (31.4% of exports, $194 billion), yet the IMF projects 2025 GDP contraction of 0.3% as tariff uncertainty freezes investment decisions. The nearshoring narrative that promised to relocate Chinese supply chains has delivered mixed results: first-half 2025 FDI hit records ($14.7 billion from US alone), but manufacturing concentrates in northern states (Nuevo León, Chihuahua, Coahuila) while southern states stagnate. Remittances—$66.3 billion in 2024, 3.5% of GDP—declined for the first time in a decade, falling 7.5% year-over-year as US deportations and border enforcement reduced diaspora earnings. This source-sink reversal threatens consumption in precisely the regions least touched by nearshoring. The economy sits at a phase transition: 76% of imports now enter under USMCA provisions (up from 50%), suggesting adaptation to the new trade regime, yet Chinese auto imports already comprise 30% of the domestic market—creating future friction as the 2026-2027 USMCA renegotiation approaches. By 2026, Mexico must demonstrate that proximity to the United States remains an asset worth the political complexity it demands.