Redwood MX Update: November 2024

This Month: Understanding the Impact of Potential New Tariffs 

Welcome to the November edition of our monthly blog, the Mexico Market Update. Published at the beginning of every month, this report looks back at the previous month to identify key economic and business trends in Mexico, transportation news and challenges, and new investors in Mexican markets. Redwood’s team of cross-border specialists created this monthly report to keep you informed. 

The big news in November was President-Elect Donald Trump’s victory in the US election — and his promise to impose a 25% tariff on Mexican goods coming into America. If imposed, this tariff would violate 2020’s United States-Mexico-Canada Agreement (USMCA), which ensures that goods can move across North America on a duty-free basis. There has been plenty of media speculation about the negative impact of these tariffs on both US and Mexican economies and many companies have inquired about pulling forward inventories ahead of any potential tariffs including forward stocking and utilizing FTZ (Foreign Trade Zone) Warehouse space as a temporary solution. Redwood Mexico will continue to monitor this situation and advise customers on how to minimize the effects of any new import duties. 

The Mexican peso appears to have stabilized around 20 with the MXN/USD exchange rate averaging $20.36 for November however any tariffs would drastically change these levels. Mexico’s diesel fuel prices remain fairly stable month-over-month, averaging MXN $96.31 per gallon in November, up slightly from the MXN $96.15 average price in October. The November price translates to $4.74 USD per gallon — significantly higher than the current US price of diesel fuel, at $3.54 per gallon. 

Security remains a huge concern for cross-border shippers. In fact, cargo theft increased by a staggering 68% from October 2023 to October 2024. The day's most prone to theft in November were Tuesdays and Thursdays, which accounted for 21% and 19% of all robberies. Most thefts occur during the morning, adding up to 81% of the total. States with the most robberies in November were Puebla, EdoMex, and San Luis Potosi — where 28% of stolen cargo was empty trucks. 

From currency fluctuations and potential new tariffs to security concerns, it can be hard to navigate the realities of cross-border trade. Trust Redwood Mexico to support you. We specialize in maximizing the financial return on your investments in Mexico, as well as the ensuring the safety of your cargo and personnel.  

Transportation News and Challenges 

Mexico Invests to Boost Transportation Volumes 
Despite Trump’s tariff promises, Mexico is investing in improved transportation routes between the two countries. A new $2.7 billion expansion of the Port of Manzanillo, located on Mexico’s Pacific coast, will double the port’s trade volumes via a new access point. The project will make Manzanillo one of the top 20 container ports in the world, rising from its current ranking of 53rd. 

Port of Veracruz Emerges as Automotive Leader 
Mexico’s Port of Veracruz is also a leader in export volumes, especially for automobiles. This port, located on the Bay of Campeche on Mexico’s eastern coast, processes 1.6 million vehicles annually — over 70% of which are destined for export. Its modern infrastructure, rail connectivity, and focus on sustainability make it a key hub for Mexico's automotive industry. The majority of vehicles passing through Veracruz are exported to the US, Europe, and Asia. It’s the third-largest port in Mexico today. 

Trade Between the US and Mexico Is Thriving
Entrepreneurs are increasingly investing in Mexico's nearshoring opportunities despite challenges like tariffs, political uncertainty, and infrastructure issues. Trade between the US and Mexico continues to thrive. According to data from the US Census Bureau, Mexico is still the largest trading partner to the US, accounting for nearly 16% of America’s total trade in September 2024. The US imported over $65 billion worth of car parts from Mexico in 2023. It also imported about $26 billion in computers, $20 billion in crude oil, and $14 billion in medical equipment. 

Investment Trends 

Foreign investments in Mexico continue to grow, as more companies recognize the benefits of near-shoring and cross-border trade. The newest investments are described below, including multiple global automotive manufacturers.  

Japanese automaker Toyota will invest USD $1.45 billion USD in Baja, California, and Guanajuato to modernize its plants. MG Motor, a Chinese-British automotive manufacturer, is building a new plant in Mexico at a cost of $1.05 billion USD. MG Motor hasn’t disclosed a construction start date or location but says the facility will produce 100,000 cars annually. Automaker Kawasaki, based in Japan, will invest $200 million USD in Nuevo Leon for a new plant. Mubea, a German automotive company, will invest $54.1 million USD in Coahuila for a new plant. E-commerce leader Amazon Mexico will invest $195 million USD in Nuevo Leon for a new facility. 

Ready to start capitalizing on the opportunities created by cross-border trade? Turn to Redwood for the expert guidance you need. Read more about our cross-border and international capabilities, or schedule an in-person meeting to discuss your specific growth objectives and opportunities.