With steady growth throughout the year despite a slight deceleration towards year’s end, the Mexican economy appears steady. However, increasingly fraught relations with the United States and the promise of tariffs from President-Elect Donald Trump, threaten the nation’s continued economic growth in the coming year.

Mexico has the 15th largest economy in the world, and it has grown steadily over the years, increasing at an average rate of 2.1% over the last ten years. According to the Federal Reserve Bank of Dallas, Mexico’s economy grew steadily throughout 2024, but the weak labor market and stalling consumption are signs that economic growth will decelerate as the fourth quarter closes and the year ends. This, compounded with threats from Trump, have the potential to squander their continued growth.

Despite Mexico’s role as one of the United States’ biggest trading partners, Trump promised to levy a 25% tariff on the neighboring country. In a social media post, Trump said he would impose these tariffs on Canada and Mexico until there is a decrease in migrants and drugs, particularly fentanyl, funneling into the United States, but experts say economic constraints would only create economic instability without addressing the root cause of Trump’s concerns.

Mexican President Claudia Sheinbaum warned Trump that Mexico would retaliate against this tariff, threatening both countries’ economic interests. “One tariff will follow another in response and so on, until we put our common businesses at risk,” Sheinbaum said. Mexico’s Economy Minister Marcelo Ebrard also warned Trump about retaliatory tariffs. “Tariffs are a tax and would hurt both countries. We will find a solution,” Ebrard said.

Mexico is the United States’ top trade partner, representing 15.8% of total trade, followed closely by Canada, which accounts for 13.9% of total trade. These tariffs have the potential to damage both the Mexican and American economies, with the looming threat of a trade war threatening to create more instabilities with domestic industries that rely on imports, most notably the automotive industry, suffering. The threat of oversized tariffs would also violate the United States-Mexico-Canada Agreement signed by Trump himself in 2020, opening the United States up to potential lawsuits.

According to FCIB’s Credit and Collections Survey, customers in Mexico have averaged 17 days beyond terms. Overall, customers have been relatively consistent, with 52% of credit managers saying delays are staying the same and 29% saying that they are increasing.

A slight uptick in delays can be attributed to cash flow issues, according to 35% of survey respondents. Billing disputes and customers’ payment policy also contributed to delays, with 27% of respondents saying one or the other was a factor. Wire transfers were the predominant payment method, with 88% of credit managers using that method to secure payment with Mexican customers.

“Customers typically do not pay on time,” one survey respondent wrote. “Government involvement can cause delays.” Another respondent wrote, quoting their sales representative in Mexico, “’Companies in

Mexico do not pay on time and will use any tactic available to avoid payment.’ It is the culture of the country.”