Economics: Mexican automotive sector faces high uncertainty ahead of USMCA renegotiation process
The first formal round of negotiations for the USMCA review took place on May 28 and 29 in Mexico City. According to various official statements and declarations, a significant portion of the agenda focused on automotive sector rules of origin and the current tariff applied to non-U.S. content in finished vehicles, as well as steel and aluminum tariffs.
This round took place against the backdrop of speculation surrounding a Wall Street Journal report indicating that the Trump administration is seeking a 50% U.S. content requirement for vehicles exported to the United States under the treaty. It bears recalling that the Mexican automotive industry, despite complying with the treaty's rules, faces a direct 25% tariff on the non-U.S. content of finished vehicles exported to that market — a measure that had a significant negative impact on exports in late 2025 and the first quarter of 2026. Although exports posted a rebound in April, the sustainability of that recovery remains uncertain. This week's Economic Outlook report analyzes the recent performance of the automotive sector and its prospects in a complex environment shaped by the ongoing USMCA review and renegotiation process.
Turning to this week's indicators, gross fixed investment (GFI) fell -3.1% YoY in March 2026, marking nineteen consecutive months of decline, with the first-quarter average recording an annual contraction of -3.3%. Private investment is expected to remain weak throughout the year — both in construction and in machinery and equipment — with the latter likely covering only a portion of depreciation in sectors that maintained momentum in 2025. This outlook reflects persistent uncertainty factors, including the USMCA renegotiation and domestic considerations such as the implementation of the Judicial Reform, among other government reforms and actions that are discouraging private investment.
Private consumption in March posted a headline gain of 3.1% on a seasonally adjusted annual basis, averaging 2.2% growth over the first quarter. However, this relatively strong figure was driven entirely by a 13% annual increase in spending on imported goods — a pattern consistent with the quarterly average. In contrast, consumption of domestically produced goods remained stagnant (0.2% annually) in March and contracted on average over the quarter (-0.4% annually), while household spending on services posted only modest growth (0.8% annually in March and 0.4% for the first quarter).
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