During a conversation with Emilio Cadena, CEO of Prodensa, at the 51st Index National Convention, former Economy Secretary Ildefonso Guajardo warned that Mexico must take advantage of the ongoing reconfiguration of supply chains, strengthen its competitiveness, and avoid protectionist measures that could weaken its integration with North America.
Mexico should not put decades of trade openness at risk or dismantle its productive integration with North America in response to the protectionist pressures facing the region, warned Ildefonso Guajardo, former Secretary of Economy and former chief negotiator of the United States-Mexico-Canada Agreement (USMCA).
During a conversation with Emilio Cadena, CEO of Prodensa, at the 51st Index National Convention in Monterrey, Nuevo León, Guajardo said one of the greatest risks for Mexico is that trade tensions with the United States could lead to a reversal of the country’s open-market policies.
“I would say that the greatest risk we face in this effort to preserve free trade in North America is a reversal of Mexico’s policy of market openness,” — Emilio Cadena, CEO of Prodensa
The former official called for using the trade policy tools already available to address unfair competition, rather than weakening the regional integration mechanisms that have enabled the three countries to build interconnected value chains.
In that context, he said Mexico should address the concerns of industries such as steel and textiles through antidumping investigations, countervailing measures and mechanisms established under existing trade agreements, rather than resorting to broad protectionist policies that could ultimately raise input costs for domestic industry.
Guajardo explained that the transformation of global trade reflects structural changes that go beyond Donald Trump’s policies. The pandemic exposed the costs of relying on overly concentrated supply chains, while geopolitical risks have made economic security an increasingly important factor in investment and trade decisions.
For that reason, he argued that regionalization and supply chain resilience will remain long-term trends regardless of which political party governs the United States.
The former Economy Secretary emphasized that Mexico needs to deepen its participation in the supply chains of sectors such as electronics, semiconductors, data center equipment and other technology-driven industries where North America still relies heavily on Asian suppliers.
However, he warned that the strategy should not be based on indiscriminately replacing imports, but rather on identifying which components are strategically important to produce within the region and which should continue to be sourced from other markets in order to maintain competitiveness.
During the conversation, Cadena also defended the importance of assembly operations to the Mexican economy, noting that this activity should not be considered a low-value stage of manufacturing because it is closely connected to engineering, design and product development.
Guajardo agreed on the need to strengthen regional production capabilities and argued that innovation must be built directly from the production floor. To achieve this, Mexico needs to participate in new areas of value creation, particularly in technology and digital manufacturing.
Amid trade uncertainty and U.S. tariff measures, Guajardo said the Mexican government’s most important area of action is improving the competitive conditions under which companies operate.
Among the priorities he identified were reducing security-related costs, strengthening logistics infrastructure, ensuring access to sufficient and competitively priced energy, preventing extortion at customs and border facilities, and protecting industrial operations.
“The only thing within the Mexican executive branch’s control in the face of this uncertainty called Donald Trump is to have an effective competitiveness policy”
— Ildefonso Guajardo, Former Economy Secretary and USMCA Chief Negotiator for Mexico
He added that a significant share of the cost of U.S. tariffs is being absorbed by American consumers, although companies may also absorb part of the impact by reducing their margins in order to preserve market share.
On investment, Guajardo argued that Mexico should rebuild an institutional strategy for international promotion that can better position the country and attract projects linked to the new configuration of supply chains.
As one proposal, he suggested creating a public-private investment and export promotion agency that could leverage existing government capabilities, including Mexico’s embassy network, while also incorporating resources from the private sector.
He also called for maintaining an ongoing dialogue with the federal government and state governments to advance a competitiveness agenda focused on addressing the obstacles companies face when operating and expanding in Mexico.
Regarding the future of the USMCA, Guajardo said he believes the United States will continue using the possibility of extending the agreement as leverage in the bilateral relationship.
In his view, Mexico should also strengthen its relationship with Democratic leaders in the United States, given the possibility of future political changes, and communicate the benefits that integrated production with Mexico brings to the competitiveness of North America as a whole.
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