MEXICO: An Introduction

Current Highlights in Economic, Political and Legal Issues

Many of the changes and challenges that Mexico faced in 2025 will set the tone for the country’s political, economic and legal outlook in 2026. Added to this are certain aspects that are in the process of being defined and will ultimately set the stage for determining the next steps for the country.

Political and economic perspectives

USMCA review

The mandatory review of the United States–Mexico–Canada Agreement (USMCA) is expected to be a central issue in Mexico’s political and economic agenda, presenting both opportunities for Mexico to strengthen its position in key sectors and risks if negotiations take an unfavourable turn. As part of the process, the parties will decide whether to extend the agreement for an additional 16 years or move to annual reviews over a ten-year period. Although the process is formally a review rather than a renegotiation, political considerations – particularly in light of the upcoming US midterm elections – are likely to influence its dynamics. Given the strategic importance of trade with the US and Canada, the prevailing expectation is that the agreement will be renewed, making close monitoring and legal safeguards essential for companies.

Tariff risks

It is expected that the Trump administration could again resort to tariffs on certain products as a negotiation tool, placing pressure on sectors deeply integrated into cross-border supply chains. This uncertainty complicates long-term planning and may affect foreign direct investment flows into Mexico, particularly in sensitive industries such as automotive manufacturing. Despite these risks, Mexico remains well positioned to manage potential tariff pressures by leveraging its integration into North American supply chains.

Inflation and exchange rate

Inflation in Mexico is estimated to be under 4%, with gross domestic product growth projected at 1.3%, while maintaining a market-determined exchange rate characterised by relative resilience and sensitivity to external facts. Deep integration with the US economy, negotiation of the USMCA, and nearshoring trends contribute to currency stability but may generate localised inflationary pressures, underscoring the importance of contractual mechanisms to manage inflation and currency risks.

Financing and capital markets

Mexico’s financing environment is expected to reflect a balance between cautious optimism and structural discipline. Mexico’s legal and institutional framework provides a stable foundation for financing activities. Mexico’s capital markets are expected to continue serving as a critical financing channel in 2026, particularly for large-scale corporate and infrastructure projects, some of the relevant legal and market developments include: (i) the ongoing use of debt instruments, including sustainability-linked bonds; (ii) increased attention to disclosure, ESG-related obligations, and investor protection standards; and (iii) continued participation of institutional investors, including pension funds, subject to regulatory investment limits.

Sheinbaum administration and Plan México

In her first year in office, President Claudia Sheinbaum introduced “Plan México”, an economic development strategy with objectives extending through 2030. Among its key goals are positioning Mexico among the world’s top ten economies, increasing the proportion of investment relative to gross domestic product, generating greater employment, and expanding national content within global value chains in strategic sectors such as automotive, aerospace, electronics and pharmaceuticals. The plan also places a strong emphasis on promoting investment aligned with environmental, social, and governance (ESG) principles. Plan México includes a dedicated regulatory framework section aimed at aligning Mexico’s legal and regulatory environment with these economic objectives.

Legal perspective

Anti-money laundering reform

Recent amendments to Mexico’s Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin significantly strengthen the anti-money laundering (AML) and counter-terrorist financing framework by expanding compliance obligations, increasing sanctions, refining enforcement criteria and introducing new regulated entities. The reform particularly affects the real estate and virtual assets sectors, broadens the concept of controlling beneficiary, and establishes a mandatory Controlling Beneficiary Registry for all commercial companies.

Amparo Law

In October of last year, the reform to the Amparo Law entered into force. Amparo, as Mexico’s primary constitutional mechanism to challenge acts of governmental authorities, remains a highly relevant legal tool for both domestic and foreign investors, as well as for real estate and infrastructure developers. The reform tightened the requirements to prove legitimate interest, raising the threshold to initiate amparo proceedings. It also modified the rules on granting suspensions, requiring judges to conduct a more rigorous analysis and expressly excluding suspensions against bank account freezes ordered by the Mexican government in cases involving alleged illicit funds. Additionally, the reform encourages the use of electronic filings and narrows the availability of amparo in tax enforcement matters, limiting challenges to specific stages of collection and reducing opportunities to delay enforcement.

Tax considerations

Mexico’s fiscal policy for 2026 adopts a dual approach that combines stricter tax enforcement with selective incentives aimed at promoting productive, long-term investment. On one hand, tax authorities are strengthening audit mechanisms, registry controls and substance requirements. On the other, targeted incentives remain available for projects aligned with national development priorities, innovation and sectoral growth.

The 2026 Tax Reform represents a structural shift in the relationship between taxpayers and the state. Compliance expectations now extend beyond formal adherence to tax rules, requiring companies to consistently demonstrate real economic substance, operational coherence and transparent documentation. Industries with complex structures, such as foreign trade, maquila, energy and digital services, are expected to face increased audits and information requests. In parallel, higher withholding taxes and expanded obligations for financial and digital transactions add pressure to cash flow and administrative processes, reinforcing the need for robust tax governance and preventive compliance frameworks.

Within this context, Plan México and the Economic Development Poles for Wellbeing (large-scale industrial and productive hubs promoted by the government), have consolidated as the central policy instrument for channeling tax incentives toward strategic sectors, including automotive and electromobility, semiconductors, pharmaceuticals, energy, agribusiness, logistics and technology. Key incentives include accelerated depreciation for new fixed assets and additional deductions for training and innovation, subject to strict eligibility requirements and budget caps. A specific allocation is reserved for micro, small and medium-sized enterprises, reinforcing the inclusive dimension of the policy.

National Antitrust Commission

The National Antitrust Commission (CNA) was created last year, although its practical impact is expected to become more visible in 2026. The CNA replaces the Federal Economic Competition Commission (COFECE) and the Federal Telecommunications Institute (IFT). Unlike COFECE and the IFT, which operated as decentralised bodies, with technical and decision-making independence, the CNA is structurally dependent on the Ministry of Economy. While the policy objectives behind the reform are understandable and aimed at strengthening competition enforcement, its true effects will only become clear as enforcement practice develops over time.

Judicial reform

We are currently in a transition process in which the votes cast in 2025 are being complied with and implemented with the appointment of new judges in the courts. This reform led to the consolidation of alternative means of justice, which have become more prevalent in agreements and negotiations between private parties, avoiding the risk of investments and negotiations in potential legal disputes. Both local and foreign investment negotiations are expected to provide for the possibility of opting for arbitration, mediation and other alternatives that facilitate any possible dispute resolution.

Real estate

The Mexico City government’s proposals on leasing and rent regulations sparked discussion on gentrification and potential limits on the parties’ contractual freedom. Real estate development remains active in the hospitality, commercial, residential and industrial sectors, while the office sector continues to evolve in the wake of COVID-19. It is estimated that foreign investment in the sector will continue in 2026.

Artificial intelligence

Artificial intelligence has become a cross-cutting technology with a direct impact on strategic sectors. In Mexico, its adoption has advanced within a legal framework characterised by the absence of a specific regulation. This situation raises significant challenges in terms of compliance, liability, data protection and fundamental rights. Representing both an opportunity and a legal challenge, the proper regulation and application of the existing legal framework will be decisive in ensuring legal certainty, fostering innovation and protecting investors’ interests.