Mexico Keeps Up Its Export Momentum in North America Despite Higher Effective Tariffs; Canada Feels the Hit From Energy and Volatility
Amid the ongoing reshaping of regional trade under the USMCA, Mexico managed to hold its ground in the world’s most important market even while facing a higher effective tariff burden than its northern partner. From January through November 2025, U.S. imports from Mexico totaled $492.513 billion, a 6% year-over-year increase, while purchases from Canada fell 7% to $351.186 billion, according to the U.S. Department of Commerce. The contrast matters because, based on estimates from the Penn-Wharton Budget Model, Mexico faced an effective tariff rate of 3.8% to 4.7% between March and October, above the 1.8% to 3.7% range observed for Canada.
The “effective tariff rate”—what is actually paid at customs rather than what is merely announced—became a more accurate gauge of the cost of trade uncertainty. In 2025, episodes tied to pressure from Washington over migration and fentanyl, implemented through the IEEPA, pushed both partners to lean more heavily on the USMCA as a legal shield. In that process, compliance with rules of origin and other treaty provisions rose sharply: Mexico moved from around 45% early in the year to roughly 90% by October; Canada followed a similar path, though starting from a lower baseline.
Beyond tariffs, export composition explains much of the gap. U.S. purchases tied to the auto sector lost steam for both countries in a year marked by inventory adjustments, still-elevated interest rates, and more selective demand for durable goods. However, Mexico offset that with a notable rebound in shipments of advanced technologies and manufacturing linked to electronics, electrical equipment, devices, and machinery—categories where productive integration with North America’s industrial belt and nearshoring have been gaining traction.
Canada, by contrast, remained more dependent on energy and commodities. That specialization made it more sensitive to the price cycle: U.S. imports of Canadian crude fell by about 20% in 2025, an adjustment mainly associated with the decline in global oil prices rather than the direct effect of tariffs. In practical terms, when the energy component dominates, the trade bill can swing more with global pricing than with logistics or manufacturing advantages.
For Mexico, the performance came amid a macro backdrop that mixed strengths and strains. On the one hand, the country cemented its position as one of the United States’ top trading partners, with a manufacturing platform that benefits from geographic proximity, supplier networks, and competitive delivery times. On the other hand, domestic bottlenecks persist: energy availability and costs, water stress in industrial corridors, security along logistics routes, and limited capacity in border infrastructure. Even so, export flows held up, also supported by strong foreign direct investment in sectors such as auto parts, electronics, aerospace, and medical devices.
Another factor was the exchange rate. The Finance Ministry noted that the peso proved resilient and ended 2025 with a significant appreciation against the dollar. A strong peso typically reduces price competitiveness for exports by making them more expensive in foreign currency. The fact that shipments held steady suggests that, for a growing share of the export basket, supply-chain integration, specialization, and responsiveness matter more than the exchange rate alone. In parallel, Banxico’s restrictive monetary stance—aimed at anchoring inflation expectations—also influenced the relative appeal of peso-denominated assets, a channel that tends to strengthen the currency when global risk appetite allows.
From a political angle, the style of trade management also played a role. Claudia Sheinbaum’s administration, with Marcelo Ebrard handling economic engagement, chose to prioritize technical negotiations and quiet coordination with Washington, seeking to reduce public friction in an environment where trade policy announcements have become more frequent and sometimes unpredictable. On the Canadian side, episodes of tension and more confrontational positions increased the perceived risk for exporters in a year when the threat of sector-specific measures boosted demand for hedging, contract reshuffling, and precautionary inventory buildups.
Looking to 2026, Mexico’s main challenge will be sustaining export growth without relying solely on the current cycle. Continued nearshoring will depend on electric-grid infrastructure, permitting, regulatory certainty, security, and the capacity to train technical talent. At the same time, a more active industrial agenda in the United States—including incentives, regional content rules, and compliance reviews—could raise administrative costs for Mexican companies, but it could also open opportunities if Mexico increases domestic content and technological sophistication. In that balance, the strength of the USMCA as a framework for certainty will remain decisive, especially amid a U.S. political cycle that tends to harden trade rhetoric.
In sum, 2025 sent a clear signal: even with higher effective tariffs, Mexico maintained its momentum in the U.S. market thanks to an export basket that is more manufacturing-heavy and technologically integrated, while Canada felt the impact of greater exposure to energy and price volatility. The next step will be turning that cyclical advantage into structural competitiveness—closing infrastructure and certainty gaps so regional integration does not depend only on external conditions.
