The approval of Donald Trump’s Fiscal Plan by the United States Senate will have an impact on Mexico beyond the remittance tax, experts said.
Jorge Molina, a consultant on public policy and international trade, explained that this plan contemplates significant cuts to social spending, especially in programs aimed at older and lower-income people, as well as those focused on the development of clean energy.
He also listed significant increases in military spending, a decrease in student loans, especially for postgraduate students, and a reduction in state-level deductions for expenses for people earning up to half a million dollars a year.
After approval in the Senate, the bill returns to the House of Representatives. The analyst pointed out that the advantage is that approval only requires a simple majority of 50 percent plus one.
“The problem is that when the proposal returns to the Senate, the final version will have to be approved by the House of Representatives, but also with the consensus of a group of senators. This will force the negotiations to continue,” Molina said in an interview with El Financiero Bloomberg.
He anticipated that adjustments will be necessary to various amendments, which complicates the final version for approval next Friday. “Trump urgently needs to announce this package as soon as possible, because tomorrow morning the reciprocal tariffs will be announced,” he stated.
According to Wells Fargo economists, the version approved by the Senate contemplates an increase in the federal budget deficit by $3.3 trillion over the next 10 years, with $4.5 trillion in net tax cuts and $1.2 trillion in net spending cuts.
Trump’s Tax Plan: What Implications Will It Have for Mexico?
Humberto Calzada, chief economist at Rankia Latam, argued that among the impacts for Mexico of this US tax plan is greater uncertainty surrounding the relocation of companies, a trend known as nearshoring.
“It could discourage (the arrival of companies) if they find better tax conditions. I think that could be the factor that could affect or hinder the redirection of nearshoring to Mexico,” he noted when asked about this situation.
However, he emphasized that it’s not just about taxes, but there are several reasons why companies could continue producing in Mexico: logistics, and the use of raw materials, which would be more expensive if production is moved to the United States.
“In that sense, the impact could be negative, but not as profound as one might expect,” he said.
Wells Fargo analysts added that the project will add between 30 and 50 basis points to US real GDP growth in 2026, with a somewhat smaller boost in 2027. This would also have an economic impact on Mexico, given that its trade integration would allow for a similar effect on the national economy.
Gerónimo Ugarte Bedwell, chief economist at Valmex Casa de Bolsa, added that the implications are mixed. On the one hand, it could encourage nearshoring by offering Mexico greater fiscal stability, but there is a risk that the arrival of remittances could be moderated by an economic slowdown caused by this plan or that public spending could be reduced, affecting sectors where Mexican migrants work.
Source: elfinanciero
