Mexico is gaining prestige as a trading destination because the tariffs imposed on it by the United States are lower than those imposed on China, argued Carlos Capistrán, chief economist for Mexico, Latin America, and Canada at Bank of America.
“Is Mexico losing its prestige as a trading destination for supplying the United States? No, Mexico is gaining prestige because when the United States imposed tariffs on everyone, we were saying that Mexico’s effective tariff is lower than the others,” he commented in an online conference from New York.
He explained that Mexico competes directly with China for the U.S. market in manufactured goods and that the Asian country’s tariff has risen to levels of 30 and 40 percent, while Mexico’s is 5 percent.
“So yes, 10 years ago both tariffs were zero, and now they have risen a lot, but China’s has risen much more than Mexico’s,” he pointed out.
“So Mexico hasn’t been losing prestige; in relative terms, it’s been gaining it. (…) And that’s why we believe Mexico must act decisively to take advantage of this opportunity. (…) It’s one of the most favored countries and must seize this moment to grow even more,” he stated.
He explained that foreign investors feel comfortable with Mexico’s risk profile when compared to other countries like Brazil and Colombia.
“With the investors I talk to, I don’t see them perceiving Mexico as having a higher overall risk than other countries. On the contrary, I sense they are comfortable with Mexico when they compare it to other countries,” he mentioned.
However, he reiterated that the cumulative 8 percent drop in Mexico’s productivity over the last 10 years is hindering greater growth in the Mexican economy.
He indicated that Mexico grew at an average rate of 2 percent for many years, a level the analyst considered low.
“But in recent times, in the last few years, the average growth rate is even half of that, closer to 1 percent per year. That’s a very, very low rate, and it’s not just from one year; it’s been going on for several years,” he emphasized.
For 2026, Bank of America estimates that Mexico’s GDP will grow by 1.2 percent, representing a moderate recovery compared to the 0.4 percent increase in 2025.
Capistrán explained that total per capita growth—that which is adjusted for population size—has remained stagnant over the last 10 years, at levels of 5.0 percent, according to comparable databases he analyzed using statistics from various international organizations such as the World Bank and the Organization for Economic Cooperation and Development.
In contrast, China’s GDP per capita grew by 70 percent in the same period, the United States’ by 20 percent, and Chile’s by 10 percent.
“Mexico is basically stagnant; it’s not growing. And if you look at the last few years, you can even see a decline (…) Mexico has a growth problem that isn’t new and has been going on for several years,” he commented.
From his perspective, the stagnation is due to Mexico’s productivity problem, which has fallen 8 percent (cumulative) in 10 years, while in the same period it rose 22 percent in China and 5 percent in the United States.
Capistrán argued that to raise productivity, it is necessary to increase investment in human capital and promote more dynamic companies that can expand into large corporations.
“The other problem is that when you take a snapshot of companies in Mexico, the country has an overabundance of small businesses (with fewer than 10 employees), which is not what you see in other countries around the world,” he said.
In turn, to raise productivity, it is necessary to increase investment in infrastructure and modernize it.
“Not only physical infrastructure, ports, etc., but also digital infrastructure. And within all of this, there is a very important aspect: investing more in inputs as well (…) energy is very important; accelerating the adoption of technology is another very important point, and finally, strengthening institutions and the rule of law,” he concluded.
Frequent reviews of the USMCA are expected
Capistrán predicted that the reviews of the United States-Mexico-Canada Agreement (USMCA), which will begin on July 1, will become increasingly frequent or even annual.
The specialist hopes that the agreement will continue to function, not break down, and remain a trilateral agreement, as well as that discussions will continue on specific issues such as energy.
“We would have a USMCA that, while not destroyed, continues, as it has more frequent reviews, so the uncertainty doesn’t completely disappear. Companies continue to face some uncertainty with the USMCA, which would imply a little more volatility for the exchange rate,” he admitted.
Source: jornada
