Mexico’s economy remains strong despite tariff strife

Mexico’s economy swerved away from a recession at the close of 2025, with rebounding gross domestic product (GDP) in the final quarter due to trade growth and strong industrial and manufacturing sectors pushing the country forward.

The nation’s GDP grew by 0.7% in 2025, according to Mexico Daily News, with exports powering the nation’s growth amid trade uncertainty. Shipments of goods abroad exceeded $664.8 billion in 2025, a 7.6% increase from the year prior. While tariffs from the United States have weighed on Mexico, more than 83% of last year’s exports went to the U.S.

Despite trade tensions, Mexico surpassed Canada as the top market for U.S. exports, according to the Wall Street Journal, with the U.S. shipping $337.9 billion in goods to Mexico, 15.5% of the nation’s total exports. Additionally, Mexico’s Business Coordinating Council said that Mexico is the leading destination for a quarter of the U.S. industrial sectors.

An analysis from the Center for Strategic and International Studies found that Mexico has been the U.S.’s fastest-growing and most stable export destination since 2020, per the Wall Street Journal, with U.S. exports to Mexico doubling over a 15-year period.

The Bank of Mexico recently decided to leave its benchmark interest rate unchanged, according to the Wall Street Journal, after 12 consecutive rate cuts to assess the inflationary impact of recent tax and tariff increases. The board of governors voted to leave the interest rate target at 7%.

The expected move follows a 3.77% increase in inflation in the first half of January, an increase from the 3.66% seen in the second half of December, while the core inflation also rose from 4.31% to 4.47% following increased taxes on soft drinks and tobacco. The government also raised import tariffs on goods from countries they don’t have trade agreements with, per the Wall Street Journal.

The Bank of Mexico expects inflation to reach its 3% target in the second quarter of 2027, a push back from the previous estimate of the third quarter of 2026. “The forecast revision incorporates the effects anticipated from the fiscal adjustments, although the comprehensive assessment of the latter will require additional information as it becomes available,” the bank said, per the Wall Street Journal.

Of the credit managers extending credit in Mexico, 36% offer 1–30-day terms, 43% offer 31–60-day terms and 21% 61–90-day terms, according to the FCIB Credit and Collections Survey. Customers in Mexico are 25 days beyond term on average. Payment delays are largely staying the same, with 29% seeing an increase. Payment delays are mostly attributed to billing disputes (54%), cash flow issues (46%), customer payment policy (23%) and foreign exchange rates (15%). Customers in Mexico secure payment through wire transfer (79%), check (21%) and letters of credit (21%).

“Truly know your customer, the business and their history,” one respondent advised. “The five C’s of credit are more important than ever in the current world economics.”

“Be diligent in collections,” another respondent said. “Allowing items to age over 90 days will make it much harder to collect.”