For several months, there has been ongoing discussion regarding the tariff policy promoted by President Trump toward other countries. In Mexico, there are significant concerns about the potential competitive impact this could have on strategic industries of national importance, such as manufacturing, the automotive sector, and agriculture. It is understandable that delegations from the Mexican government have been traveling back and forth to negotiate with their U.S. counterparts, given that more than 75% of our country’s exports go to the United States—amounting to nearly USD 500 billion in 2024.
Our strong relationship with the United States is not limited to trade. In terms of foreign direct investment (FDI), in 2024 Mexico attracted investments from companies in our northern neighbor totaling slightly over USD 16 billion, the fourth-highest figure in the past 25 years. Only 2001, 2015, and 2019 exceeded this level. What set 2024 apart from previous years—and had not been seen in the last quarter-century—was the nature of this investment: 90% of FDI came from reinvested earnings, nearly USD 15 billion, confirming the positive trend that began in 2023 when USD 11 billion, or 82% of FDI, also remained in Mexico.
This reinvestment of earnings means that profits generated by foreign companies remained in Mexico rather than being repatriated to the United States. This is undoubtedly positive for our country, as it creates more jobs, attracts more investment, and boosts economic activity. There may be several reasons why foreign companies have chosen to reinvest their resources domestically, but one is that these companies see good opportunities in our country and are willing to continue investing—an encouraging sign that investing in Mexico is worthwhile. This has not been the norm: with the exception of the last two years, the average share of reinvested earnings as a percentage of total FDI over the past 25 years has been only 34%.
What, then, is the challenge facing our country and our government? Attracting new investment from U.S. companies. The year 2024 was one of the four worst in the last 25 years, along with 2000, 2014, and 2023. In the previous year, new investment totaled just USD 2 billion. It is precisely this point that I wish to focus on in this reflection.
What, then, is the challenge facing our country and our government? Attracting new investment from U.S. companies. The year 2024 was one of the four worst in the last 25 years, along with 2000, 2014, and 2023. In the previous year, new investment totaled just USD 2 billion. It is precisely this point that I wish to focus on in this reflection.
We are experiencing a favorable period in which foreign companies that have already invested in the country have confidence in Mexico and are choosing to keep their resources here, which could be interpreted as a sign that we are an attractive investment destination. Yet, at the same time, we face a major challenge: new investments from our main trading partner have declined. Having demonstrated that investing in the country is viable and that such investments can be sustained, shouldn’t this be the moment to look outward and further explore other regions of the world—both to diversify our exports and to invite new companies to invest in Mexico?
Mexico ranks among the countries with the highest number of free trade agreements worldwide, enabling preferential tariff conditions with over 60% of the global economy. According to the Ministry of Economy, our country has 14 free trade agreements with 52 countries and 30 agreements for the promotion and reciprocal protection of investments with 31 countries or administrative regions. Furthermore, Mexico is an active member of the WTO, APEC, the OECD, and ALADI. While the USMCA is our most important treaty, the second most significant is with the European Union, which provides tariff agreements with 27 countries. Another important agreement is the Trans-Pacific Partnership, which includes countries such as Japan, Australia, and Singapore, granting access to over 500 million consumers.
It is important to recognize that other nations, also considered developing economies, do not have the same opportunities as Mexico. The effort to build this network of trade agreements has been ongoing for many years, across administrations of various political orientations. Much of the work is already complete: we have the frameworks, mechanisms, and regulations in place. Now it is up to the key players—companies and entrepreneurs.
Our economic dependence on the United States, while highly beneficial for both nations, can at times be detrimental from an attitudinal and cultural standpoint, given the degree of complacency it has fostered. Our geographical position in North America, our natural resources, the capabilities of the Mexican people, and the quality of our products and companies should drive us toward a stronger commitment to diversification. This does not mean forgetting or abandoning our principal partner and ally. First, because it would be practically impossible to reinvent the country overnight, and second, because the United States has been one of our primary engines of growth, and it would not be in our interest to turn away.
Recent developments are encouraging: efforts are underway to expand trade with another major player in the Americas, Brazil; plans are being discussed for a new trade agreement with the European Union in 2026; and media reports have highlighted the planned visit by Singapore’s president to Mexico in late 2025 to announce the opening of its 30th embassy worldwide and to strengthen commercial and business ties. All these opportunities are within reach for companies and entrepreneurs willing to explore new markets and challenge the status quo.
Achieving diversification does not mean that we will stop worrying about potential new U.S. tariffs on our country. However, it will allow us to operate with less uncertainty—conditions typical of a diversified and consolidating economy.
Author Information:
Dr. Héctor Xavier Ramírez Pérez, vice-rector of the Universidad Panamericana, Mexico City campus.
