IMF Warns of US Tensions and Tariff Risks; Mexico Weighs Effects on Exports, Inflation, and Interest Rates
The latest assessment from the International Monetary Fund on the United States—Mexico’s main trading partner—points to a moderation in domestic demand and a cooling labor market, while import tariffs increase the upward bias in inflation. According to IMF spokesperson Julie Kozack, the disinflationary trend in the US remains intact, but new tariffs could reignite price pressures. This outlook is particularly relevant for Mexico: slower US economic growth and a costlier trade environment could impact Mexican exports, the exchange rate, and ultimately the path for local monetary policy.
The IMF noted that job growth in the US has slowed and that efforts to front-load imports ahead of potential tariffs introduced volatility in first-half activity. In addition, a recent review indicated that 911,000 fewer jobs were created than previously estimated, suggesting a weaker labor base. Against this backdrop, the Fund sees room for Federal Reserve rate cuts, though with caution. For Mexico, eventual monetary easing in the US could help relieve currency pressures; however, higher US tariffs—such as those promoted by President Donald Trump’s administration, according to the IMF—would raise the cost of inputs and final goods, with mixed effects on prices and trade volumes.
The trade channel is the most immediate. Roughly 80% of Mexico’s exports go to the US, with deep integration in automotive, electronics, and machinery supply chains. Lower consumer and business spending in the US tends to moderate Mexico’s manufacturing output, particularly in the northern states and the Bajío region. At the same time, broader US tariff policies could increase the cost of imported inputs from Asia that are used in Mexican production, affecting margins and delivery times. If the tariffs target third countries, Mexico could gain market share through trade diversion; but if the measures are more generalized, the net benefit diminishes or could even reverse.
The nearshoring trend remains a structural support: investment announcements in industrial parks, logistics, and advanced manufacturing continue, boosting capital formation and formal employment. However, the full realization of these opportunities faces bottlenecks in power and water infrastructure, land availability for industry, and regulatory processes. Expanding energy and transport capacity will be key to capturing demand redirected from Asia without pushing up costs.
On the price front, Mexico has managed a gradual disinflation since 2022 peaks, though services inflation remains above average, driven by labor costs and resilient demand. US tariffs that drive up input costs or affect the exchange rate could introduce new volatility. Mexico’s central bank, Banxico, began a cautious rate-cutting cycle in 2024, conditioned on the inflation trajectory and the balance of risks. Faster cuts by the Fed would make convergence easier, but currency pressures or trade supply shocks may require Banxico to maintain a restrictive stance for longer.
Domestic consumption has found support in the formal labor market, wage hikes, and remittances at historic highs. However, a cooling US job market could slow remittance flows and demand for Mexican exports, affecting the wage mass in regions with strong migrant ties. The so-called “super peso” has kept imported inflation in check, but its strength also puts pressure on exporters’ competitiveness; a shift in the dollar’s trajectory due to rate expectations or trade uncertainty would quickly translate into prices and corporate balance sheets.
On the fiscal front, the need for prudence persists in the face of higher financial costs and the need to support Petróleos Mexicanos, whose debt profile remains a focal point for ratings agencies and investors. A less favorable external environment would make it all the more important to preserve fiscal anchors and accelerate projects that boost productivity, especially in energy, logistics, and legal certainty.
In short, Mexico’s baseline scenario combines moderate growth, gradual disinflation, and continued nearshoring, with downside risks stemming from a sharper slowdown in the US and a potential escalation in tariffs. Coordination among monetary policy, fiscal discipline, and a competitiveness agenda will be key to cushioning external shocks and turning nearshoring into sustained investment and productivity gains.
