USMCA uncertainty dents fresh foreign investment in Mexico

Fresh foreign investment in Mexico fell 13% in the first half of 2026 from a year earlier, preliminary data shows, as uncertainty over the future of the USMCA trade pact and a sweeping judicial overhaul prompt companies to reconsider their plans.

Overall foreign direct investment hit a record near $35 billion in the period, but almost all of it came from reinvested earnings. Only 7.8% represented new capital, a sign the country is struggling to attract fresh money. Greenfield investment — spending on new factories and warehouses — nearly halved to $24 billion in 2025, according to UNCTAD figures.

Business leaders say the core problem is the unresolved fate of the USMCA. Washington declined to renew the pact in July, opting instead for annual reviews, leaving exporters unsure of the tariff regime from one year to the next. Mexico sends about 80% of its exports to the U.S., and nearly 89% of the daily $1.5 billion in goods cross the border under the treaty's umbrella.

More than a dozen executives told reporters they are reconsidering projects, with some drawing up plans to relocate to Vietnam or other Asian destinations. Three auto parts companies in Aguascalientes are weighing a move, while two multinationals have entered a "wait-and-see" phase.

"If we are going to have a constant renegotiation until July of next year, let's just turn off the lights, close the doors and go invest somewhere else," said Pedro Casas, CEO of the American Chamber of Commerce of Mexico.

Compounding the trade worries is Mexico's 2024 judicial reform, which replaced appointed judges with elected ones, unsettling companies concerned about the rule of law.

President Claudia Sheinbaum has touted "Plan Mexico" to revitalise manufacturing, and the economy grew 1.4% in the second quarter, its fastest pace since early 2022. Much of that strength came from exports of computers and AI-related data-processing equipment to the U.S. — a dependence that has pushed the U.S. trade deficit with Mexico to record levels.

Mexico's central bank said in its August report that exports should expand moderately, but noted that "the lack of a definitive resolution regarding its future remains an adverse factor for investment decisions."

One example of the shift: Randy Carr, who opened an embroidered-patch factory in Mexico in 2005 and grew it to 800 workers, opened a new plant in the Dominican Republic in June and plans to halve his Mexico workforce through attrition. "It's a hedge," he said. "We just have too much at stake right now in Mexico."