On October 1, Claudia Sheinbaum was sworn in as Mexico's first female president, facing immediate challenges from the United States regarding economic policies. US Republican presidential candidate Donald Trump has urged companies in Mexico to relocate to the US or face steep tariffs, casting doubt on Mexico's economic model, which relies on low-cost production for American markets.
Trump's remarks at the Republican National Convention and subsequent campaign speeches have raised alarms among Mexican officials and businesses. He threatened a 100% tariff on electric vehicles produced by Chinese manufacturers in Mexico and encouraged German automakers to shift their operations to the US, promising a reduced corporate tax rate.
Sheinbaum's agenda remains unclear until after the US presidential election on November 5, which could significantly impact Mexico's economy, particularly if Trump or Kamala Harris assumes office. Sheinbaum inherits a relatively strong economy, with a GDP growth of 3.2% last year and a notable decrease in poverty rates.
However, a controversial judicial reform pushed by outgoing President Andres Manuel Lopez Obrador has raised concerns among international trade partners. The reform proposes that federal judges be elected directly by the public, a move critics argue could increase organized crime's influence over the judiciary.
The US has already seen investments of approximately $35 billion frozen in response to these changes, with US Ambassador to Mexico Ken Salazar expressing worries about the potential implications for democracy and bilateral trade, which stands at $807 billion.
Despite these challenges, Sheinbaum's administration is optimistic about attracting foreign direct investment, projecting an increase of $3 to $4 billion annually. However, the Mexican peso has already depreciated by 13% against the dollar since her election, reflecting investor skepticism.
German companies, crucial to Mexico's automotive sector, are closely monitoring the situation as they assess the potential impacts of the judicial reform and US tariff threats on their operations in Mexico.