Mexico Country Risk Rating

Mexico’s overall risk is medium-high. The critical issue for 2026 is the renegotiation of the USMCA agreement with the U.S. Though Mexico’s relationship with Trump is better than Canada, the USTR decision not to approve an extension means an annual review from 2027 now occurs on top of the current 2026 review. Trump will likely deliver more threats to get concessions that can be included in bilateral addendums. On balance, president Sheinbaum will still likely concede in the USMCA trade battle to win the wider war of keeping most Mexican exports going to the U.S. In the end, we see a trade deal by late 2026/early 2027. Even so, Sheinbaum’s Morena party is opposed to Trump’s calls for present and former Mexican politicians to be prosecuted by the U.S. DOJ. This could mean intermittent tension with the U.S. Meanwhile, Sheinbaum’s average approval rating has modestly fallen to 60%, reflecting concerns over the weak economy and continued high level of violence (amplified by the cartels). Political violence risk in Mexico therefore remains high. Legal and regulatory risk is also high, as the left-wing coalition led by MORENA controls both houses and could potentially lead to regulatory changes in an anti-market manner. Sovereign non-payment risk is medium, as the government debt level is projected to be 62.7% in 2026 according to the IMF, and the government is currently undergoing a fiscal consolidation process to stabilize the debt/GDP ratio. The inability of the government to provide stimulus remains at a medium rating, reflecting the fiscal consolidation. Exchange transfer risk is medium, as the country holds an adequate level of foreign currency reserves alongside a current account that is in broad balance.