MI’s Mexico Public Affairs Chatter – Feb. 4, 2025

Mexico’s 30-Day Reprieve: Triumph as Crisis Averted (For Now)

After a particularly volatile long weekend, Claudia Sheinbaum successfully defused her first real crisis, by convincing President Trump to withdraw at the last minute the proposed 25% tariffs on Mexico exports – at least, for the next 30 days. By any standards this was a huge diplomatic and economic triumph, and Mexicans from all political persuasions – from the business class to the Morena fan base – were singing her praises and negotiating skills. As the long weekend faded, one likes to imagine the chant of ‘Saint Claudia’ echoed both from the luxury villas along the Carretera Nacional, Nuevo León and the urban sprawl of East Tijuana (Mariano Matamoros, El Refugio…)

 

Until Sheinbaum’s X on Monday morning the outlook was looking dim. Her political enemies delighted in the apparent slight of her not being invited to Trump’s inauguration last month. Things only got worse from there as Trump last week announced 25% tariffs on Mexican and Canadian exports to the US due to alleged lack of cooperation on migration and fentanyl smuggling. The situation came to a boil on Saturday, when the White House explicitly denounced “the Mexican drug trafficking organizations have an intolerable alliance with the government of Mexico”. The statement was part of a “fact sheet” released by the White House to justify President Donald Trump’s 25% tariffs on all Mexican goods.

 

Sheinbaum quickly characterized this as “slander” in an X post and then in a hard-hitting but measured video message. But she vowed to maintain the dialogue with the Americans, insisted cooperation not subordination was the solution, and cleverly avoided rolling out reprisals right away, but looked for a deal. She then asked for the Monday morning phone call with President Trump, conducted half in Spanish and half in English. Whatever was said, worked.

 

An agreement was announced at 9.21am on Monday morning, after what was described as a “very friendly” call between the two presidents. President Sheinbaum dedicated her entire yesterday morning press conference to reporting on the agreement, with Mexico agreeing to deploy 10,000 troops from the National Guard to “reinforce” its northern border, a minor concession and maybe even a good idea in itself. High-level conversations will continue, with the US team led by Secretary of State Marco Rubio, who as a Senator famously traded barbs with AMLO. What sort of additional demands the American government will have is now the big question but Mexico is likely to play ball.

 

With the clock reset but still ticking, the situation remains complex, even if most analysts doubt now tariffs threat will come back in the short term but instead dealt with by a new USMCA.  The government insists that the economy is strong, but investors remain wary of the uncertainty provoked by this episode and likely upcoming USMCA negotiations, with the larger banks stating that the unpredictable situation is expected to weigh on economic growth. With nearshoring momentum at risk and inflationary concerns growing, Mexico’s resilience is being tested.

 

Mexico’s Finance Minister had to hold an emergency meeting with investors to calm market jitters. “While external challenges may temper economic activity, recession is not part of our outlook,” he reassured them. Soon after the call, the deal was reached, and all of Mexico thanked the President (whose approval ratings were already soaring pre the deal but now must be even higher). As the economy weakens in 2025 and reality begins to bite, 9.21am Monday February 3rd may even prove her high point.

 

Judicial Lottery Chaos

Stumbling about, behind schedule, and largely ignored by the public eye, the congressional Evaluation Committee continued its lottery selection for magistrates—just a day after wrapping up the process for Supreme Court justices and district judges. The session was, for lack of a better word, a mess: lawmakers had to pause when they realized the published list of candidates didn’t match the names drawn from the lottery balls.

 

The Supreme Court will select candidates from a list defined by the Senate—one with names linked to Morena. On Friday, the Senate carried out the lottery ordered by the Electoral Court to determine which candidates met the eligibility requirements, a task the Judiciary’s Evaluation Committee failed to complete.

 

The final list, produced through an extensive “random” selection process, was heavily stacked with individuals tied to the ruling party. While the SCJN must make the final decision on the candidates by a qualified majority, the already high odds of Morena securing dominance in the following Supreme Court lineup have increased even further, if that is possible.

 

Despite the apparent blunders, Senate President Gerardo Fernández Noroña, visibly annoyed, insisted that these issues didn’t invalidate the process, stating simply that “whatever needs to be fixed will be fixed, period.”

 

Morena’s Infonavit Overhaul

While Morena argues that the reform is meant to regulate Infonavit’s organization, administration, operation, oversight, and accountability. Opposition lawmakers, on the other hand, remain critical, accusing the reform of being a mere power and money grab. With a new government-controlled company managing billions, the move consolidates financial and political control under the ruling party.

 

After a nearly nine-hour session, the Chamber of Deputies approved the reform. Key changes include:

 

  • The creation of an Infonavit subsidiary to handle housing construction.
  • Allowing Infonavit to partner with private developers on housing projects.
  • Regulating social leasing with a rent cap at 30% of a worker’s salary.
  • Banning debt balance updates and extra charges on worker loans.
  • Granting the Infonavit CEO veto power at the oversight committee.
  • Expanding oversight powers for Mexico’s Treasury, banking regulators, and audit authorities.

 

 

Contact:

Laura Camacho

Executive Director Miranda Public Affairs

laura.camacho@miranda-partners.com

 

Download PDF: MI-PublicAffairsChatter-020425