Global Manufacturing Slowdown and U.S. Tariffs Add Pressure to Mexico’s Export Industry
Weak manufacturing demand in the United States and the ongoing implementation of tariffs in that market once again took a toll on global supply chains in October, according to international business surveys. Purchasing Managers’ Indexes (PMIs) from advanced economies and Asia showed slower growth in new orders, longer lead times for input deliveries, and cautious investment trends—a scenario that historically impacts Mexico quickly, given its close integration with the U.S. industrial cycle.
For the Mexican economy, where roughly eight out of every ten export dollars come from sales to the United States, a slowdown in orders from the northern neighbor typically results in lower capacity utilization in key sectors like automotive, electrical equipment, and electronics. On top of this, episodes of trade tensions add an extra layer of uncertainty: while some firms operating in Mexico have benefited from trade diversion and a boost from nearshoring, volatility in tariffs and rules of origin increases planning risks and raises costs for certain imported intermediate goods.
Local activity indicators—such as PMIs and the IMEF manufacturing index—have shown ups and downs in recent months, hovering around the threshold between contraction and expansion. Qualitatively, companies are reporting more moderate foreign orders, more conservative inventory levels, and elongated investment decisions as they wait for greater clarity on costs and demand. The post-pandemic normalization of logistics has helped, but there are still specific bottlenecks and higher costs for inputs sensitive to geopolitics and maritime transportation.
Automotive, the export centerpiece, continues to adjust to a more selective U.S. consumer environment and stricter regional content requirements under the USMCA. In auto parts and electronics, the densification of suppliers in North America is moving forward, but unevenly: increasing local content requires investment in machinery and molds, certifications, and specialized labor—all of which depend on Mexico’s financial and infrastructure conditions.
On the cost side, the recent appreciation of the peso has been a double-edged sword: it makes imported capital goods and inputs cheaper, but compresses the profit margins of exporters receiving payment in U.S. dollars. At the same time, the Bank of Mexico’s tight monetary policy—aimed at consolidating disinflation—keeps borrowing costs high, which discourages some expansion projects until there is more certainty regarding the outlook for prices and interest rates.
On the trade front, the continuation of U.S. tariffs on strategic goods and the possibility of selective adjustments in other markets are forcing Mexican companies to diversify suppliers, renegotiate contracts, and—in some cases—redesign processes to comply with regional content rules. For its part, Mexico has temporarily applied tariffs to products from countries without a trade agreement; this strategy protects local industry but also changes the cost equation for those importing inputs.
Looking ahead, the balance of risks for Mexican manufacturing will depend on the pace of North American demand, the stability of trade rules, and the country’s domestic capacity to absorb more investment. The competitiveness agenda—reliable and affordable energy, logistics infrastructure, security, and human capital—will be key to turning interest in relocating supply chains into sustained growth in domestic value added. If the U.S. industrial cycle stabilizes and price pressures continue to ease, manufacturing activity in Mexico could find a floor and gradually return to growth.
In short, the combination of a global manufacturing slowdown and an uncertain tariff landscape in the United States is keeping the Mexican industry in a defensive posture. The strength of the U.S. market remains the anchor, but further improvement will depend on internal progress in infrastructure and energy as well as clearer signals regarding costs and external demand.
