Factory Focus Weekly Insights for Manufacturing in Mexico
It's the blog for manufacturing executives operating in Mexico. Designed as a concise, high-value fact sheet, it delivers critical weekly updates on legislative and regulatory changes that could impact your business.
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Aluminum & Steel Tariffs Take Effect
President Trump has reintroduced 25% tariffs on steel and aluminum imports, sparking global retaliation and trade tensions. Canada, the largest U.S. metal supplier, announced tariffs on $20 billion of American imports, while the European Union targeted $28 billion worth of U.S. goods. Countries like Japan, Australia, Mexico, and Britain have refrained from immediate retaliation but are preparing for potential escalations. Trump’s move is intended to protect U.S. metal industries, yet it raises costs for manufacturers and risks economic repercussions, with Goldman Sachs lowering its 2025 U.S. growth forecast from 2.4% to 1.7%. Analysts warn of inflationary pressures and broader trade wars.
Mexican President Claudia Sheinbaum and Foreign Minister Marcelo Ebrard, face a critical decision on its response. Historically a major supplier of U.S. steel, Mexico is evaluating countermeasures while balancing economic stability and trade relations. The tariffs could impact the country’s industrial exports and trigger price increases in manufacturing sectors dependent on U.S. metals. Ebrard has emphasized the need for diplomatic engagement to mitigate potential disruptions.
Howard Lutnick praised Mexico for not retaliating against U.S. tariffs, stating that countries cooperating with the U.S. will receive favorable treatment. He warned that nations responding with countermeasures risk facing strong reactions from President Trump. Mexico’s approach was highlighted as a strategic decision in maintaining positive trade relations with the U.S.
Meanwhile, Canada and the EU retaliated against Trump’s 25% tariffs on steel and aluminum imports by imposing reciprocal duties on U.S. goods. Canada targeted steel, aluminum, and consumer products, while the EU hit key American exports like beef, bourbon, and motorcycles. The tariffs could cost businesses billions and escalate trade tensions. European Commission President Ursula von der Leyen criticized the move, warning of economic harm. Despite diplomatic efforts, the EU reimposed suspended tariffs from 2018-2020 and added new duties on $19.6 billion in U.S. exports. Officials stressed the need for negotiation to prevent further economic strain on both sides.
Canada's Next Prime Minister
Mark Carney, former Governor of the Bank of Canada and ex-director of the Bank of England, was elected leader of the Liberal Party, making him Canada’s next Prime Minister. Carney, 59, won with 86% of the votes in an internal election, replacing Justin Trudeau, who led the country for over eight years. His appointment comes amid escalating tensions with the U.S., driven by Donald Trump’s trade war and controversial remarks about annexing Canada. Carney firmly rejected these claims, emphasizing national unity and vowing to defend Canadian sovereignty. His leadership is expected to lead to early elections, either called by the government or triggered by a no-confidence motion. Trudeau, in his farewell speech, defended his legacy, highlighting Canada's resilience against external pressures. Despite declining popularity in recent years, he received strong support from party members. Carney’s financial expertise and nationalist stance are expected to shape Canada’s future policies.
Recent Changes to the Infonavit Law and Their Implications
The recent reform to article 29 of the Infonavit Law has sparked significant concern among employers and legal experts. This modification mandates that employers continue to cover workers' housing credit payments to Infonavit even during periods of worker absences or incapacities not related to professional risks. Previously, employers were exempt from making these contributions during such periods, except for retirement insurance. This change imposes a substantial financial burden on employers, as they must now make these payments even when the worker is not receiving a salary.
Legal specialists argue that this modification is unconstitutional and have highlighted the possibility of challenging it through legal action. Employers have until March 17 to file such challenges. The reform's critics emphasize that it unfairly increases the fiscal responsibilities of employers, potentially leading to significant financial strain. They also point out that the reform does not alter the existing provisions of the Social Security Law, which means no additional discounts will be made beyond those already established by law.
In response to these changes, Infonavit has clarified that the new criteria for applying discounts based on salary and age will only affect new loans granted from February 21, 2025, onwards. For existing loans, the previous criteria will continue to apply. Infonavit assures that this reform does not imply an increase in interest rates or monthly payments for workers. The goal is to ensure greater equity and fairness in applying discounts. Employers and workers are encouraged to consult with financial advisors or legal experts to understand the full impact of these changes on their financial planning and obligations.
Source: El Economista