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June 17, 2024

International Elections Series: México — Business Briefing

At a Glance

  • Claudia Sheinbaum, a protégé of outgoing president Andrés Manuel López Obrador (better known as AMLO), was elected México’s first female president. The ruling Morena party also expanded its majority in Congress, including a supermajority in the Chamber of Deputies and substantial majority in the Senate.
  • While Sheinbaum is a staunch ally of outgoing president AMLO, she has indicated a desire to establish her own approach. This would be welcomed by international businesses wary of AMLO's rollback of pro-business reforms.
  • México has benefited from "nearshoring" due to U.S.-China trade tensions and supply chain shifts, becoming the top U.S. trading partner in 2023. However, inadequate infrastructure investment and significant budget deficits pose a risk to sustained growth and business attractiveness.
  • The USMCA, crucial for México's trade with the U.S. and Canada, will undergo review in 2026. President-elect Sheinbaum will need to navigate complex trade issues, including a potential new U.S. administration, and balance economic interests with sensitive North American trade politics.

México Elects its First Female President 

On 2 June 2024, México, the world's most populous Spanish-speaking country, elected climate scientist and former mayor of México City Claudia Sheinbaum as its first female president by a resounding margin at the polls. She will serve a six-year term starting in October.

All 500 members of the Chamber of Deputies and all 128 members of the Senate were also on the ballot, with the ruling Morena party increasing its legislative majority. The Morena party and its allies now have a supermajority in the Chamber of Deputies and are just two votes shy of a supermajority in the Senate, putting it within striking distance of being able to enact constitutional changes.

Continuity or Change? 

President-elect Sheinbaum rode the coattails of popular outgoing president Andrés Manuel López Obrador (better known as AMLO). Her landslide election affords her significant political capital to drive her policy agenda.   

While a staunch ally of the outgoing president, president-elect Sheinbaum has indicated she intends to adopt her own approach. International businesses will cautiously hope the new president’s self-proclaimed independence will be a welcomed alternative to her outgoing predecessor, who used his power to roll back many pro-business reforms of former president Enrique Peña Nieto, including the liberalization of the energy sector. 

Challenges Facing the New Government

Nearshoring and Infrastructure Challenges

In recent years, México has been a prime beneficiary of “nearshoring” whereby many global businesses have restructured their supply chains to countries located near their customer base to avoid geopolitical uncertainties, rising transportation costs, tariffs and other restrictions. Due to persistent U.S.-China trade tensions, the COVID-19 pandemic, growing protectionism and shifting supply chains, México overtook China and Canada as the top trading partner of the United States in 2023. 

However, a lack of sufficient investment, coupled with the growth in bilateral U.S.- México trade (near $900 billion) has put pressure on México’s infrastructure. Failure to address México’s ailing infrastructure will operate as a constraint on business and trade and reduce México’s appeal to international businesses. Budget challenges will also be an issue the new government will have to face.  México’s budget deficits have grown to almost 6% of GDP under AMLO’s lavish public sector spending program. At the same time, president-elect Sheinbaum — notwithstanding her green credentials and commitment to develop more robust renewable energy generation — has pledged to continue AMLO’s costly subsidization of Pemex, the state oil company, which is the most indebted oil company in the world.

USMCA and Future Trade Relations

A vital part of México’s success in becoming a new global hub is the enhancement of its international trade framework. The centerpiece of economic relations between México and the United States is the U.S.-Mexico-Canada Agreement (USMCA or T-MEC in Spanish), a comprehensive trilateral trade agreement that replaced NAFTA in 2018. The USMCA will be up for mandatory review in 2026 during the administration of president-elect Sheinbaum. 

While AMLO officially signed USMCA on behalf of México, it is no secret that he was not a major supporter of the agreement, which his predecessor negotiated. Since the enactment of the USMCA, the U.S. and México have both sparred over numerous trade issues, ranging from genetically modified corn and biotechnology, to energy, labor, country of origin labeling rules, and tariff-rate quotas. President-elect Sheinbaum will need to carefully balance México’s economic interests with her trade philosophy, all the while taking into account the sensitive politics of North American trade relations.  


Organized and violent crime in México has remained stubbornly high since the Mexican government officially declared war on drug trafficking organizations under former president Felipe Calderón in 2006. In the last presidential term alone, 43,000 people are considered missing and México has recorded approximately 30,000 murders each year. Reducing violence is one of the public’s top priorities and would similarly be strongly welcomed by international businesses. 

Rule of Law

Under AMLO’s presidency, some have argued that México experienced a backsliding in the rule of law and the erosion of the independence of institutions. This has given rise to concerns about the long-term durability of México’s democracy. A legislative supermajority potentially paves the way for radical constitutional reform. It may be unrealistic to expect the new government to resist the urge to push forward with constitutional reforms outlined by outgoing president AMLO, including the direct election of Supreme Court judges and index-linked increases in the minimum wage. The challenge for president-elect Sheinbaum will be in shoring up business confidence and stability in such a context.

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