The 2026 economic package reflects the trend toward neo-protectionism in Trump’s administration, albeit with the distinctive stamp of Sheinbaum’s 4T. A budget that reflects the disappointment with the unrestricted market freedom of globalization and the new tendency to isolate itself within regional economic blocs like North America.
The ABCs of the first budget drafted exclusively by the President are, to a large extent, a roadmap for her six-year term, taking into account the international disorder and uncertainty surrounding the renegotiation of the USMCA. The government is consolidating its social policy, while yielding to the current era of tariff barriers to protect domestic production with Plan Mexico and aligning itself with US interests in its trade war with China as a means to pave the way for the signing of the agreement.
The movement on the geopolitical stage marks the timing and steps for its greatest challenge: consolidating income redistribution and relaunching growth. A combination that rarely goes together, but which Mexico has decided to address with a dual policy of free trade with its main market and barriers outside the USMCA economic bloc, even though it deepens dependence on North America and also fails to guarantee greater competitiveness for domestic industry.
The first criticism has come from Beijing, with the accusation that Mexico is submitting to Washington’s coercion by seeking to increase tariffs by 50% on nearly 1,500 products from countries like China and other Asian countries. The proposal is part of the backbone of the package and demonstrates US trade pressures, although it is justified by protecting Mexican manufacturers from dumping and unfair practices, which would imply a 40% reduction in imports of intermediate goods for production.
Sheinbaum’s budget formula rests on a no less strange combination of leftist social policies, as it places its clear protection of the working class at its center. Along with a program of strict public spending austerity, which neoliberals would applaud, aimed at cleaning up public finances, the rating agencies, and the US, but without progressive fiscal policies that tax those with higher incomes more heavily, thus keeping income concentrated. And now, in addition, the component of economic nationalism with which he hopes to achieve growth of around 2% compared to the average of neoliberal governments of the last 30 years, although unlike them, without shutting off the tap on social programs, even if the expansion were smaller; and even if significant shortcomings persist in education and healthcare, where indicators have declined.
In order to build this model, he will need enormous political balance to streamline public administration without falling into state inefficiency, and to combat corruption in the institutions that his predecessor declared finished, without keeping his promise. The austerity policy, now for the second year, could dispel the “surprises” that the Treasury expects from the 2026 growth; And the delivery of direct resources to the population is insufficient to make progress against poverty, which during López Obrador’s six-year term depended primarily on wage increases. Is there still room for further increases?
Certainly, the budget is the best snapshot of power and its priorities, and this is no exception regarding social policy, to which a tenth of the total 10.1 trillion pesos to be spent in 2026 will be allocated; or the payment of almost a third of debt maturities this year and next, along with increased debt due to the Pemex bailout, and 24% for pensions. But the most uncertain aspect is the scope of the revenue to finance it, with debt that will exceed 20 trillion pesos for the first time, although still a manageable level and lower than in other countries; and the tax improvements with the fight against invoice companies, import tariffs, and austerity.
The projections may be wrong; First, due to external uncertainty, and second, due to the limitations in persuading domestic businesspeople to risk their investments in the country. This is one of the biggest questions about the package: whether they will back up the support they give the President in their speech with their investments. Sheinbaum’s economic model for 2026 will largely depend on this.
Source: lineapolitica
