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Weekly Report October 16th, 2026

Hot Topics USITC HEARING HIGHLIGHTS INDUSTRY CONCERNS OVER TIGHTER AUTOMOTIVE RULES The U.S. International Trade Commission held its October 14 hearing on the economic impact and operation of the USMCA automotive rules of origin as part of its 2027 review. Industry representatives from both the United States and Mexico cautioned against significantly tightening the existing framework, arguing that the current rules already require substantial North American content and that further increases could raise costs and disrupt regional supply chains. MEMA, The Vehicle Suppliers Association, said 72% of surveyed suppliers consider USMCA duty-free treatment extremely important to their North American operations, while nearly 46% of regional revenue depends on goods or inputs crossing at least one North American border. The association also reported significant compliance costs and supported preserving the current rules while limiting future adjustments to targeted, evidence-based changes.

On the Mexican side, the Mexican Automotive Industry Association (AMIA) Director General Odracir Barquera warned that increasing regional-content requirements beyond the current 75% threshold could increase production costs, reduce investment and weaken North America’s competitiveness. AMIA also noted that some materials, parts and components required for advanced automotive technologies are still not produced within the region in sufficient volumes or at competitive costs. Source: MEMA, USITC, La Jornada

EBRARD BRIEFS LAWMAKERS ON U.S. TRADE NEGOTIATIONS Economy Secretary Marcelo Ebrard met with members of the Chamber of Deputies’ Economy, Commerce and Competitiveness Committee and the Social Economy and Cooperative Development Committee to brief lawmakers on the progress of Mexico’s trade negotiations with the United States. Ebrard said Mexico currently maintains favorable conditions for access to the U.S. market and reviewed the status of discussions with the country’s largest trading partner.

SHEINBAUM AND CCE SET INVESTMENT AND GROWTH PRIORITIES President Claudia Sheinbaum and the Business Coordinating Council (CCE) used the organization’s 50th anniversary to outline a shared agenda around investment, economic growth and implementation of Plan México. CCE President José Medina Mora said the private sector supports the government’s objective of increasing investment, but stressed that announced projects must translate into formal employment and regional development. He identified legal certainty, security, sufficient and competitive energy, infrastructure and water as key conditions for companies to commit capital. The CCE also called for reducing the fiscal deficit, preserving Mexico’s investment-grade rating, strengthening the rule of law and expanding domestic supply chains. Medina Mora said the organization is working with the government to identify obstacles delaying investment projects and highlighted the USMCA review as another priority for the private sector. Sheinbaum emphasized the regular dialogue maintained with business organizations and said the government and private sector need to work together amid a complex international environment. She also highlighted plans for approximately MXN 8.4 trillion in public and mixed investment during her administration, excluding purely private investment, as part of the government’s broader strategy to support growth and competitiveness. Source: Presidencia de la Républica, El Economista, Expansión

The meeting also covered coordination between the Economy Ministry and Congress around Plan México, particularly the development of the Polos del Bienestar. Ebrard and lawmakers agreed to maintain dialogue on the economic and social development agenda, while the secretary is scheduled to appear before the same committees on Friday to continue discussions on Mexico’s trade and economic policy. Source: Secretaría de Economía

Hot Topics U.S. MILITARY EXPANDS BORDER PRESENCE AS MEXICO INCREASES COORDINATION The U.S. Army is deploying hundreds of additional soldiers to the Rio Grande Valley as part of a broader military presence along the U.S.– Mexico border. U.S. officials said the increase responds to signs of elevated activity by Mexican drug cartels and comes alongside greater cooperation with Mexican authorities. The deployment includes Army personnel, Black Hawk helicopters, Border Patrol boats and expanded surveillance capabilities along areas that previously saw high levels of irregular crossings. Mexico has also reinforced its side of the border, deploying 500 National Guard and military personnel to Tamaulipas based on intelligence regarding criminal-group movements. The operation includes two UH-60 helicopters, drones and anti-drone equipment. U.S. forces have also increased efforts to detect and disrupt cartel drones used for surveillance and drug trafficking, while the Coast Guard continues enhanced patrols on the Rio Grande following the recent exchange of gunfire near Garceno, Texas. AP reported that illegal crossings in the area have fallen sharply, while both governments continue coordinated operations against drug and human trafficking. The expanded deployment comes as President Donald Trump again intensified his rhetoric on Mexico’s security situation. Trump said he had told President Claudia Sheinbaum directly that “the cartels control Mexico” and reiterated that the United States is shifting greater attention toward drug trafficking routes over land. His comments add political pressure to the bilateral security relationship as both governments continue coordinated operations along the border. Source: Associated Press, El Universal

ENERGY EMERGES AS A POTENTIAL LEVER IN U.S.–MEXICO TRADE TALKS President Donald Trump has pushed Mexico to deepen energy ties with the United States as both governments continue broader trade negotiations. According to Reuters, Trump raised the possibility of greater cooperation between U.S. and Mexican energy companies during talks with President Claudia Sheinbaum, including arrangements that could increase Mexican purchases of U.S. energy products. The Financial Times reports that energy is already the sector where the United States runs its largest trade surplus with Mexico, totaling about US$25 billion last year. Mexico’s manufacturing sector relies heavily on natural gas imported by pipeline from Texas, while U.S. gasoline and diesel also supply a significant share of Mexican demand. The two presidents have discussed a potential arrangement similar to a 2025 U.S.–South Korea deal, which combined investment commitments with US$100 billion in U.S. energy purchases.

At the same time, greater U.S. energy purchases would sit uneasily alongside Mexico’s policy of “energy sovereignty.” Pemex continues to face declining domestic gas and oil production, while the FT notes that replacing competitively priced U.S. pipeline gas would require major investment over time. These conditions make energy an increasingly relevant component of the bilateral economic relationship as Mexico looks for areas where additional U.S. purchases could help address Washington’s concerns over the bilateral trade deficit. Source: Reuters, Financial Times

IMSS WORKERS ESCALATE PROTESTS OVER WAGES AND WORKING CONDITIONS Workers from the Mexican Social Security Institute (IMSS) expanded protests in Mexico City this week over wages, working conditions and shortages of medicines, equipment and hospital supplies. The mobilizations included doctors, nurses, retirees, social workers, administrative personnel, ambulance operators and other staff, while demonstrations and a sit-in affected Paseo de la Reforma and other major roads. Protesters also called for changes to the pension system and increased public health spending. The dispute intensified after workers rejected a proposed 2.9% salary increase and demanded that negotiations be reopened. The broader petition also calls for health spending equivalent to at least 7% of GDP and reforms to strengthen the financial viability of the IMSS. Workers have warned that mobilizations could continue if no agreement is reached, while the IMSS has said demonstrations have not interrupted patient care. Source: El País, El Financiero

Legislative and Regulation Issues: PUBLIC FINANCE

TAXATION

FEDERAL REVENUE LAW FOR FISCAL YEAR 2027

DRAFT DECREE AMENDING VARIOUS PROVISIONS OF THE INCOME TAX LAW (ISR)

Presented by: Federal Executive (President Claudia Sheinbaum). Finance and Public Credit Committee, Chamber of Deputies. Purpose: Establish federal revenue estimates of MXN 10.63 trillion for 2027 and authorize net domestic borrowing of up to MXN 1.7 trillion. During the legislative discussion, an amendment introduced by Deputy Ricardo Monreal (Morena) eliminated the MXN 300 million income ceiling for eligibility under the SAT Tax Regularization Program. The measure allows individuals and companies with qualifying tax liabilities from 2025 and previous years to receive reductions of up to 100 percent on fines, surcharges, and enforcement expenses, subject to legal requirements and full payment of the principal tax liability by December 31, 2027. Status: 2026-10-15 – Approved by the Chamber of Deputies with 340 votes in favor and 109 against in the final vote. Sent to the Senate for further consideration.

Presented by: Federal Executive (President Claudia Sheinbaum). Finance and Public Credit Committee, Chamber of Deputies. Purpose: Modify corporate tax deductions and expand eligibility for the Simplified Trust Regime (RESICO). The reform introduces restrictions on authorized deductions for companies with annual revenues exceeding MXN 50 million, limits the offset of previous fiscal losses to 50 percent of annual taxable profits, and reduces the net interest deduction ceiling from 30 to 20 percent of adjusted taxable income. It also extends the period for applying fiscal losses from 10 to 20 years and raises RESICO annual revenue thresholds from MXN 3.5 million to MXN 5 million for individuals and from MXN 35 million to MXN 50 million for legal entities. Status: 2026-10-14 – Approved by the Chamber of Deputies with 322 votes in favor and 115 against in the final vote. Sent to the Senate for further consideration.

FOREIGN TRADE DRAFT DECREE AMENDING AND ADDING VARIOUS PROVISIONS OF THE CUSTOMS LAW Presented by: Federal Executive (President Claudia Sheinbaum). Finance and Public Credit Committee, Chamber of Deputies. Purpose: Strengthen customs oversight, combat the undervaluation of imported goods, and improve compliance with customs regulations. The reform expands verification powers, allowing customs authorities to initiate procedures when declared import values are lower than those of identical or similar goods, while eliminating the previous 50 percent undervaluation threshold for precautionary seizures. It also introduces stricter penalties for customs violations, including fines ranging from 50 to 100 percent of the commercial value of hydrocarbons and petroleum products involved in documentation-related infractions.

Status: 2026-10-13 – Approved by the Senate in general and in particular, completing its passage through both chambers of Congress. Sent to the Federal Executive for enactment and publication in the Official Gazette (DOF). The reform is scheduled to enter into force on January 1, 2027.