MEXICO: An Introduction

Background

In 2025 the Mexican economy has continued to slow down as a result of both internal and external factors. For 2025, GDP growth is forecasted to be around 0.5%. US trade and tariff policies have created uncertainty and are affecting investment decisions, especially investments that contemplate exports to the United States.

President Claudia Sheinbaum took office on 1 September 2024. Her administration has manoeuvred a number of hurdles, particularly with respect to the vital relationship with the United States, and has to some extent sheltered the Mexican economy from major setbacks. It is encouraging that the official guidelines and governmental plans assumed by President Sheinbaum have placed an emphasis on attracting investment in electricity, renewable energies, infrastructure, telecommunications, ports, highways, technology, and access to banking and financial markets. The foregoing could foster increased co-operation between the United States and Mexico, and between the private and public sector. 

While those actions have avoided other damages, the risk of higher or broader tariffs has halted a number of investments. The United States-Mexico-Canda Free Trade Agreement (USMCA) is up for review in 2026, and negotiations will commence at the end of 2025. The extension of the USMCA – with expected amendments in areas such as car manufacturing, steel and copper trade, digital payments and others – will alleviate many concerns and work as an investment signal for many stakeholders.

On the internal front, the fight against corruption and organised crime has intensified. Economically, inflation has remained at around 4% to 4.5%, after a very prolonged period of highly restrictive interest rates that Banco de Mexico has lowered this year.

Additionally, a package of constitutional and legal reforms that became effective in recent months is causing investors to reconsider certain projects, although M&A and financial markets continue to be active.

Reforms

Judicial reform

The reform contemplates:

• that the designation of National Supreme Court justices and federal judges shall be made by popular vote;
• an amendment to the National Supreme Court of Justice, including decreasing the number and tenure of justices;
• an amendment to the system of administration of the federal judicial power, which now includes a new entity with members appointed by the executive power and the senate, and not only from the judiciary; and
• the creation of a disciplinary court, in charge of hearing complaints against members of the judicial power.

Under the reform, on 1 June 2025 elections were held to elect nine Supreme Court justices and one half of the federal judges. The elected judges will assume office on 1 September 2025. The next elections for the federal judiciary are scheduled for 6 June 2027.

The judicial reform casts doubts on how the system will work, as there will be many judges taking office with limited or no experience in the bench. As a result of the reform, investors are looking at alternative dispute resolution methods such as arbitration. The attractiveness of arbitration will be tested; if investors who are not satisfied with arbitral awards challenge them in court, it will make arbitration less palatable as inevitably such disputes would end up in the judiciary.

Regulatory agencies

Transparency and data protection

The National Institute for Transparency, Access to Information and Personal Data Protection (INAI), which was an autonomous agency, has been replaced by the Anti-Corruption and Good Governance Ministry, which is part of the executive branch. It remains to be seen whether access to government information will be available to the public in a transparent manner.

Competition

In July 2025, the Federal Economic Competition Law was amended with a significant redesign of the institutional framework for the enforcement and compliance of antitrust laws, as well as its procedures and sanctioning regime. The Federal Economic Competition Commission (COFECE), which was an autonomous agency, has been replaced by the National Antitrust Commission (CNA), a decentralised agency under the Ministry of Economy. The CNA will also assume the competition-related powers of the old Federal Telecommunications Institute (IFT) in the telecoms and broadcasting sectors, thereby creating a single antitrust agency for all sectors. Other significant changes include:

• lower thresholds for merger notifications and elimination of several exemptions;
• new rules for non-notified mergers, including formal verification procedures; and
• higher penalties – up to 15% of the economic agent’s revenue for cartel-related activities and up to 10% for abuse of dominance or unlawful mergers.

Energy and electricity

The relevant amendment gives more powers to CFE and PEMEX but, at the same time, may reopen certain energy-related activities for private investment. Among others, the changes include:

• establishing that regulations will determine how private individuals may participate in other activities of the electric industry, without private companies taking priority over the respective public state company;
• that the goals of the National Electric System will be to preserve the nation’s energy security and self-sufficiency, and to provide electricity to the people at the lowest possible price; and
• the obligation to guarantee social responsibility, continuity and access to electricity.

National Development Plan

In April 2025, President Sheinbaum published the National Development Plan 2025–2030 (NDP), which will be the guiding public policy document for the current administration.

Key infrastructure commitments of the NDP include:

• connectivity and mobility, including expanding, modernising and rehabilitating over 4,000 km of federal highways and rural roads;
• rail infrastructure that contemplates building more than 3,000 km of new railway lines for freight and passenger trains, and developing a new line of the Interoceanic Train towards the border with Guatemala;
• energy infrastructure, with contemplated projects ranging from clean and renewable energy to rural electrification and expansion of power distribution networks;
• water infrastructure, with goals that include strengthening and expanding dams and aqueducts; and
• port and airport infrastructure, with the modernisation of 11 ports along Mexico’s coastlines.

Electricity

In the energy sector, President Sheinbaum has reiterated that the Mexican State shall maintain a majority stake participation in the generation of power, and has openly supported the participation of the private sector in the electricity sector and in renewables and energy transition. Substantial activity is expected in this industry to fulfil the growing demand of electricity and the lack of investment, not only in generation but in transmission and distribution grids. Distributed generation should continue to grow, and the energy demands of nearshoring, technology infrastructure and data centres will likely require the development of alternate generation projects.

The foregoing is aligned with President Claudia Sheinbaum’s National Electricity Strategy, which promotes:

• energy transition towards renewable energy sources and energy self-sufficiency;
• efficiency and rationality in energy consumption, while securing a robust and reliable electrical system; and
• clear rules to secure and increase private investment.

Tax

It is expected that the current administration will continue with most current tax policies, including increasing tax collections and combating tax evasion, as well as tax audits with a deep review of taxpayers’ transactions. Nevertheless, recent discussions have flagged the possibility of a tax reform in the coming future.

In January 2025, a decree granting tax incentives to support the NDP was enacted, aimed at fostering new investments, incentivising dual training programmes and promoting innovation, among others.

Capital Markets

An amendment to the Securities Market Law was enacted in December 2023 to implement a simplified procedure for the registration of securities, mainly aimed at increasing the participation of small and medium-sized companies in public securities offerings. In January 2025, regulations were published contemplating:

• the possibility of structuring the respective transactions in multiple manners, including as equity, debt instruments, asset-backed securities or structured securities;
• the distinction between different types of issuers depending on the size of the respective transactions;
• the definition of target markets, which are limited to institutional and qualified investors; and
• easing regulatory costs to encourage participation.

Telecoms

The new Legislation on Telecommunications and Broadcasting came into effect on 17 July 2025. Under the new law, the IFT will be replaced by the Telecommunications Regulatory Commission (CRT). The CRT will assume the powers previously held by the IFT and will regulate telecoms, broadcasting and digital services. The new law contemplates regulations over:

• providers of passive infrastructure, with respect to the installation, deployment and maintenance of telecoms infrastructure; and
• operators of digital platforms and services.

Other key changes relate to satellite regulation, substantial power and preponderance, and new types of licences and registrations.