President Trump recently declared that the proposed 25% tariff would be imposed on goods from Mexico and Canada starting this week, disregarding its two largest trading partners and its commitments under the US-Mexico-Canada Agreement (USMCA). This move comes after President Trump had previously struck a deal with both countries to secure their borders but cited insufficient progress from its neighbours in combatting illegal drug trafficking.
Two days after this decision, following an exchange between US President Trump and Mexico’s President Sheinbaum, President Trump agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA. This agreement will remain in place until 2 April, when the US plans to apply reciprocal tariffs.
Economic Growth Expectations in Mexico
Mexico has aimed to enhance Foreign Direct Investment (FDI) through the so-called Plan Mexico, with telecommunications playing a key role in the country’s modernisation plans. However, Mexico’s Central Bank has recently lowered its economic growth expectations to between -0.2% and 1.4%, attributing this to the high uncertainty surrounding US policies. US tariffs on Mexico are expected to decrease its GDP by 2% from the current level. If Mexico were to impose tariffs on the US in response, its GDP could drop by nearly 3.5%.
Despite President Trump’s recent decision to delay the application of tariffs on Mexican products under the USMCA, these continuous announcements have created market uncertainty, not only in Mexico but also on the New York Stock Exchange.
What’s at Stake for the Telecommunications and Tech Sector?
President Trump’s tariffs have primarily targeted physical goods, so digital trade services may currently be exempt. However, this could impact service development in the telecommunications industry.
The telecommunications sector has benefited from lower service prices, leading to greater market penetration. However, inflation-driven price increases can have the opposite effect, which is why operators often absorb this pressure. This pressure on inflation may increase under the current uncertain conditions.
Economic growth expectations in Mexico are low, not only because of the uncertainty created by the tariffs but also due to the constitutional changes impacting the federal judicial system and the autonomy of the telecommunications regulator (IFT) and competition authority (Cofece). These factors create a particular complex scenario for the telecommunications industry.
Mobile operators have seen their operational flexibility reduced and have therefore promoted initiatives like Fair Share, which aims to impose contributions on digital platforms to support connectivity and digitisation.
Mexico is currently discussing a new telecommunications law. In response, telecom operators have intensified discussions about Fair Share, which could be further supported by the potential impact of tariffs on the telecommunications industry and the need to foster conditions for additional investment in telecommunications infrastructure.
With the recent modernisation of the Mexico-EU trade agreement, European telecom companies could see advantages in import diversification.
What Comes Next?
Along with previous reforms, the digital ecosystem in Mexico now faces additional uncertainty. International trade influences business opportunities, and the collaboration between the US and Mexico has been crucial for developing digital technologies. Therefore, any changes in tariffs could significantly impact pricing and user benefits, potentially leading to inflationary effects. Tariffs may also discourage key investments in the tech sector, including Artificial Intelligence (AI) and advanced manufacturing.
Companies must closely observe the immediate impacts and shifts in international trade dynamics, as Trump’s policies risk further destabilising the already uncertain Mexican digital market.
Staying Ahead of Uncertainty
As the leading tech policy firm, Access Partnership can guide you through this transformative period. Our expertise in regulatory advocacy and market strategies ensures that your organisation is prepared to adapt to these transformations. As a global business, we support clients locally, nationally, and internationally.
To learn how your organisation can navigate the implications of shifting international trade and leverage opportunities in this evolving landscape, please contact Rodrigo Serrallonga at [email protected], Geusseppe Gonzalez at [email protected], and Fernando Borjón at [email protected].
