As 2024 came to a close, Mexico’s domestic affairs were relatively quiet, following months of fast-paced reforms (undoubtedly helped by the decision not to call for a congressional extraordinary period over the holiday break), the international front was anything but, with continued high-stakes bilateral developments with the United States, as Donald Trump´s administration draws closer.
Still, President Sheinbaum maintained an active schedule, pausing her daily mañaneras only on Christmas and New Year’s. Her administration is set to kick off the first full workweek of 2025 with activities tied to the National Development Plan. On Sunday, January 12, the President will deliver her first state-of-the-nation report, marking the completion of her first 100 days in office, following the tradition established by her predecessor, Andrés Manuel López Obrador.
While the investor community, and much of the foreign press, have been highly critical of Sheinbaum’s enthusiastic support of almost all of AMLO’s Plan-C (judicial reform, elimination of autonomous agencies, etc.), leading to approval and passage in law of most of the key elements by year-end, she herself will be pleased with her approval ratings in her first 100 days in power. According to a poll by El Financiero, her approval rose from 70% in October to 78% in December 2024. Similarly, a survey by highly respected Enkoll for EL PAÍS and W Radio, published on December 19, reported a 76% approval rating, even surpassing the levels achieved by AMLO at a similar point in his term. There is no evidence the broader Mexican public shares the elite’s misgivings on Plan-C, if anything quite the contrary.
This recap highlights the most significant events and decisions that shaped the final fortnight of the year, offering a lens into the priorities and challenges that await in the new year.
Mexico Implements Tariffs and Tax Reforms to Protect Domestic Industries and Combat “Abusive Practices”
The Mexican government introduced a series of protective measures to bolster domestic industries, particularly textiles, and to address “abusive practices” that led to unfair competition from international platforms. Firstly, a 35% tariff was imposed on imported finished textile goods and a 15% tariff on other textile imports, effective through 2026. The government’s stated rationale is to shield Mexican manufacturers, which truth be told, have had some rough times, facing shrinking production and the loss of approximately 79,000 jobs in recent years. Key textile production hubs such as Puebla, Coahuila, Hidalgo, and the State of Mexico are poised to benefit significantly from this policy. However, it is surely not coincidental that the tariffs will have a greater impact on China, at a time when president-elect Trump continues to push for action against the Asian country.
Later in December, the government imposed a 19% tax on goods imported via courier from countries without a free trade treaty and sold through digital platforms, such as Shein and Temu, beginning January 1. Critically, this reform eliminates the tax-free (“de minimus”) break for goods under US$50 of value, addressing what local businesses have long complained is a loophole that have allowed foreign e-commerce platforms to operate at an unfair advantage. Interestingly, goods from the US and Canada will also face a new tariff, though at a slightly lower rate of 17% for goods priced between $50 and $117, which will severely impact platforms like Amazon and Mercado Libre as well.
Moreover, foreign e-commerce platforms are now required to register with Mexico’s Federal Taxpayer Registry (RFC) and collect VAT (16%). Most platforms immediately adjusted their pricing. While some items are now cheaper compared to last month (likely remaining inventory from Christmas), others have seen notable price increases. Further specific regulations for these platforms are said to be under consideration.
Speculation Builds Up as Trump Considers Designating Mexican Cartels as Terrorist Organizations
President-elect Trump’s proposal to label Mexican cartels as terrorist organizations has raised questions about its implications for bilateral relations. While President Sheinbaum has expressed her willingness to cooperate on security issues (a contrast to AMLO), she has also called for the need for mutual respect, rejecting any unilateral actions by the United States. Still, it is still unclear how aggressively the incoming Trump administration will be in its pursuit of high-profile cartel leaders.
Speculation increased last week after various media outlets reported a document was said to be circulating among Morena senators, warning of potential unrest in Mexico should the US military intervene in the country to attack cartels. Senators Gerardo Fernández Noroña and Adán Augusto López both denied the authenticity of the document, calling it “fake” and suggesting it could be part of a disinformation strategy.
Sheinbaum vs NYT – Fentanyl “Kitchen Labs” Report Sparks Public Outcry
After a recent New York Times investigation highlighted the existence of small-scale fentanyl production labs in Mexico, often referred to as “kitchen labs,”, President Sheinbaum denounced the story. Saying it “lacked credibility”, she had Navy experts at one of her morning conferences, who stated the conditions described in the article were not viable due to the high toxicity of its chemical components. The New York Times said it stood by its reporting.
Mañanera controversies aside, the exposé underscores the challenges faced by Mexican authorities in curbing the illicit drug trade, particularly as production methods become more decentralized and difficult to detect.
Sheinbaum Prepares Ambitious Legislative Agenda for February 2025
President Sheinbaum announced her administration will present approximately 20 legal and constitutional reforms during the upcoming congressional session starting February 1. Among the proposals are amendments to key laws as well as the drafting of secondary legislation tied to AMLO’s constitutional reforms. Central to this agenda is a constitutional amendment to prohibit re-election and curb nepotism in public office, reforms to laws governing Infonavit, public procurement, and public works, as well as secondary legislation for Pemex and the CFE, following their recent reclassification as public entities prioritizing state-led energy production.
It remains unclear whether Sheinbaum’s government will move ahead on electoral reform, and if so how. As envisioned by AMLO’s original Plan C, it would reduce the Chamber of Deputies from 500 to 300 members and the Senate from 128 to 64 members, with all legislators elected through a first-past-the-post system. The stated objective is to streamline legislative processes and reduce public spending, but a first past the post system would likely favor Morena as the dominant party, cementing a possible 2/3 majority even if its national supports slips. In addition, Plan-C calls for a restructuring of the National Electoral Institute (INE). The proposal reduces the number of INE councilors and advocates for their selection through popular vote. The measure’s stated aim is to enhance democratic participation and diminish perceived biases within the electoral authority, but again would likely lead to pro-Morena officials running the electoral authority, reducing its independence. Both changes will for sure meet stiff resistance and heighten concerns about erosion of democracy in Mexico.
Public Forums Starts Ahead of Presentation of the PND
The administration is gearing up to write the National Development Plan (PND), a blueprint that will define Mexico’s strategic priorities for the next six years. The PND focuses on fostering economic resilience, reducing inequality, and accelerating the transition to renewable energy. The government will carry out a series of public consultations across the country, from Jan. 6 to 19, after which it will unveil detailed sector-specific goals and funding strategies in early 2025.
Mexico Doubles Down on GM Corn Restriction Despite USMCA Panel Ruling
Following a USMCA dispute panel ruling which found the Mexican ban on genetically modified (GM) corn is inconsistent with trade obligations, Mexico faces growing pressure to modify its stance on GM corn. However, President Sheinbaum has reaffirmed her commitment to “protecting Mexico’s biodiversity”, and said the country will look for ways around the resolution, including a constitutional ban.
IEPS Increase Fuels Debate
The Special Tax on Production and Services (IEPS) increased by 4.5% starting January 1, leading to price hikes for products such as gasoline, diesel, soft drinks, flavored beverages, and cigarettes. President Sheinbaum dismissed talk of a “gasolinazo” (a sudden fuel price surge). However, she announced that she has instructed the Ministry of Energy to meet with fuel industry business leaders to “prevent speculation about fuel prices”.
The government’s decision to increase the IEPS for gasoline and other fuels has sparked widespread discussion about its potential economic ripple effects. While the hike is intended to bolster federal revenues and fund critical infrastructure projects, it also raises concerns about inflationary pressures on transportation and goods.
Severe Budget Cuts Jeopardize INE’s Ability to Ensure a Robust Judicial Election
INE’s General Council approved a budget of MXN 6.2 bn (~US$306 mn) for the first judicial election, set to take place on June 1, 2025. This figure, slashed by 53% from the original request presented to the Chamber of Deputies, has raised concerns about the INE’s ability to carry out an election with the same high standards it has followed over the past years.
The reduced funding will impact key areas such as Electoral Training, Electoral Education, and Outreach to promote citizen participation, which was cut by nearly two thirds. Additionally, logistical operations—including ballot printing, warehouse rentals, and the security and transportation of electoral materials—have been reduced by 63%.
Contact:
Laura Camacho
Executive Director Miranda Public Affairs
laura.camacho@miranda-partners.com
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