# Mexico > [!info] Gateway page > Orientation on Mexico is here. The full historical cluster — from the [[Mexican-American War]] through the PRI system, NAFTA and the drug war — is at [[Mexican History Hub]]. **Mexico** is the country American politics talks about most and examines least. It is the largest US trading partner, the source of most of the fentanyl that crosses the border, the origin of the largest immigrant population in the United States, and the other party to the trade agreement this administration has refused to renew. Each of those facts is the basis of a separate policy fight, and the right tends to merge them into one story about the border. That merger is the thing to watch. Tariffs on Mexico have been justified as fentanyl policy, then as forced-labor policy, then as national-security policy; threats against cartels arrive alongside trade demands. The vault keeps the instruments apart: a tariff is a tax collected from American importers, a terrorist designation is a legal predicate, and a trade review is a negotiation. Mixing them is a bargaining tactic, not a description of the problem. ## Economy and the US link *Readings as of 10 October 2026.* | Measure | Reading | |---|---| | Nominal GDP | $1.83 trillion (2025); $2.12 trillion projected for 2026, 13th in the world (IMF World Economic Outlook, April 2026) | | Real growth | 0.8% in 2025, the weakest year since 2020 (INEGI, revised February 2026); 1.9% year on year in Q2 2026 after 0.4% in Q1 (INEGI revised estimate, August 2026) | | Inflation | 3.45% headline, 3.75% core (September 2026, INEGI) | | Policy rate | 6.50%, held unanimously on 24 September 2026; last move a 25-basis-point cut on 7 May 2026, on a 3–2 vote | | US goods trade, 2025 | US exports $337.9B, imports $534.8B, deficit about $197B (Census data via CRS; USTR) | | Rank | Largest US trading partner in goods for the third straight year in 2025, at $872.8B two-way, ahead of Canada and China | | What the US buys | Computer equipment ($90.8B), motor vehicles ($84.4B) and vehicle parts ($67.3B) led 2025 imports; Mexico was also the largest market for US farm exports, 18% of the total (CRS; USDA) | | Remittances | $61.7B in 2025, down 4.56% — the steepest fall in 16 years (Banxico, 3 February 2026) | | Foreign direct investment | Record $40.9B in 2025, up 10.8%; the US supplied 38.8% (Secretaría de Economía, February 2026) | **The nearshoring boom is mostly reinvestment.** Of 2025's record foreign investment, $27.6 billion was reinvested earnings of firms already in Mexico and only $7.4 billion was new investment (Expansión, from official data). Firms are expanding existing plants rather than committing new capital while the tariff regime is unsettled. **Remittances are falling.** Mexican coverage attributes the 2025 drop to US immigration enforcement. Since 1 January 2026 a 1% federal excise tax, enacted in the [[Big Beautiful Bill]], applies to remittances sent in cash, money orders or cashier's checks; transfers funded from bank accounts or cards are exempt (BBVA Research; Miami Inter-American Law Review). **Tariffs: three legal costumes and the USMCA shield.** - **4 March 2025** — 25% tariff on all Mexican imports under the [[International Emergency Economic Powers Act]], justified by fentanyl. From 7 March 2025, goods qualifying under the [[USMCA]] were exempted. - **20 February 2026** — [[Learning Resources v. Trump]] struck down the IEEPA tariffs. - **24 February – 24 July 2026** — a 10% surcharge under Section 122 of the [[Trade Act of 1974]], again with USMCA-qualifying goods exempt. - **24 July 2026** — [[Section 301 Forced Labor Tariffs]] at 10% for Mexico, the lower of the two tiers. Goods entering duty-free under USMCA are exempt (BBVA Research; CRS). A separate Section 301 excess-capacity investigation remains open. - **[[Section 232]]**, which the Supreme Court ruling did not touch, is where Mexico is actually hit: 50% on steel and aluminum with no USMCA exemption (since June 2025); 25% on autos; and since 1 November 2025, 25% on medium and heavy trucks, applied only to non-US content for USMCA-qualifying trucks, plus 10% on buses. The USMCA exemption kept qualifying Mexican goods out of every general tariff layer, which is why the [[USMCA]] review matters so much. The US declined to extend the agreement at the 1 July 2026 joint review, which moved it to annual reviews rather than ending it. A fourth bilateral round, planned for Washington in September, was postponed; Marcelo Ebrard, Mexico's economy secretary, met [[Jamieson Greer]] at the [[G20]] trade ministerial in Milwaukee on 1 October without a deal or a new date (ICPA tracker; Bloomberg Línea). Mexico's priority is relief from the Section 232 duties on steel and vehicles. Bloomberg reported on 30 September, citing unnamed Mexican officials, an expected cut in the light-vehicle rate from 25% to 15%; neither government has confirmed it. **Mexico has adopted the US posture toward China.** Mexico's Congress approved tariffs of up to 50% on imports from countries without a Mexican trade agreement — China above all, but also South Korea, India and others — effective 1 January 2026, with autos, auto parts, textiles, clothing, plastics and steel at the top rate. This is the "free-riding from non-parties" that the US raises in the USMCA talks: Mexico is paying for its access to the American market by closing its own market to Chinese inputs. ## The political frame Claudia Sheinbaum, president since October 2024, has handled Trump by cooperating on enforcement while refusing on sovereignty. The line she will not cross is American troops on Mexican soil. Trump has said repeatedly that he urged her to let the US bomb cartels or send forces in. In a Fox News interview in January 2026, days after the capture of [[Nicolás Maduro]], he said the US would now begin attacking the cartels on land and that the cartels were running Mexico (Última Hora; El Imparcial). Sheinbaum has rejected every such proposal. This page found no report of a US strike on Mexican territory as of early October 2026. The legal groundwork is already laid. In February 2025 the administration designated the Sinaloa Cartel, CJNG and other groups as a [[Foreign Terrorist Organization]], which brings material-support law into play and supplies the same narcoterrorism predicate used against Maduro. In right-wing politics Mexico serves three purposes. It is the origin point of the immigration story, a deportation arc that runs from the [[Mexican Repatriation]] through [[Operation Wetback]]. It is the face of the [[Fentanyl Crisis]]. And it is a stage for symbolic sovereignty: the Day One renaming of the Gulf of Mexico as the "Gulf of America" ([[2025 Inauguration and First Wave EOs]]) became the template for the [[Lake America Renaming Executive Order]]. The economic relationship that binds American factories and farms to Mexico rarely appears in that story. ## Where to go from here | Destination | What's there | |---|---| | [[Mexican History Hub]] | The historical arc, from colony to Morena | | [[USMCA]] | The agreement, the July 2026 non-extension, and the bilateral rounds | | [[NAFTA]] | The 1994 predecessor and its political afterlife | | [[Mexican Drug War]] | The cartel war since 2006 | | [[Fentanyl Crisis]] | The synthetic-opioid supply chain | | [[Section 301 Forced Labor Tariffs]] | The tariff layer in force since 24 July 2026 | | [[Section 232]] | The national-security tariffs on steel, autos and trucks | | [[Tariffs]] | The full tariff architecture | | [[Trade Deficit]] | Why the bilateral deficit is a poor measure | | [[Mexican-American War]] | The war that drew the border | | [[Mexican Repatriation]] | The 1930s expulsions | | [[Mexican Oil Expropriation]] | The 1938 nationalization and the sovereignty myth it founded | | [[Exchange Stabilization Fund]] | The 1995 peso rescue and the Treasury fund that paid for it | ## See also [[Canada]] · [[China]] · [[Venezuela]] · [[Global Economy Hub]] · [[Countries Hub]] · [[Immigration Restrictionism Ecosystem]] · [[Carceral and Border Security Sector]]