Francisco Bracamonte
Tax Partner at Kreston BSG
Tariffs and trade: How to do business in Mexico under the USMCA
February 25, 2026
Doing business in Mexico under USMCA has become increasingly attractive over the last six years, as the country consolidates its position as a strategic destination for global investment, reflected in record levels of Foreign Direct Investment in 2024 and 2025.
This dynamism is driven by several factors. Mexico’s privileged geographic location, with more than 3,000 kilometres of border with the United States, allows access to major U.S. logistics hubs within one or two days, optimising time and costs.
The 2020 Trade Agreement between Mexico, the United States, and Canada has provided greater legal and commercial certainty, eliminating tariffs for most products and creating the largest market in the world.
In February 2026, U.S. trade policy developments added further complexity to the regional outlook. While Washington announced a new 10% global tariff framework, goods from Mexico and Canada that qualify under the United States–Mexico–Canada Agreement (USMCA) were exempted — reinforcing the continued importance of rules-of-origin compliance. At the same time, ongoing policy discussions ahead of the scheduled 2026 USMCA joint review have sustained debate about the longer-term trajectory of North American trade integration.
The reconfiguration of global supply chains has shown that the relocation of operations (nearshoring) is a structural trend, not a temporary one, driving sectors such as automotive, aerospace, electronics, logistics, agribusiness, and advanced manufacturing. Despite political challenges, this trend will be difficult to stop in the long term, given advances in communications and transportation that enhance economies of scale.
Key considerations when doing business in Mexico
1. Understand the regulatory and tax framework
Mexico is an overregulated country, so operating a business requires navigating a complex and constantly evolving regulatory environment.
- Sophisticated tax system: The tax authority has strengthened digital audits, electronic reviews, and compliance requirements. Transfer pricing rules, anti-base erosion and profit shifting measures, and anti-abuse provisions demand technical precision and continuous monitoring.
- Trade Agreement and rules of origin: To take advantage of tariff benefits, it is necessary to design the supply chain, corporate structure, and supporting documentation meticulously.
- Specific sector regulations: Industries such as energy, healthcare, specialised services, information technology, manufacturing, and foreign trade require additional authorisations and reinforced compliance.
The best strategy: Work with experts who combine local experience and international perspective to anticipate risks and ensure informed decisions.
2. Relocation of operations: more than moving plants
Establishing operations in Mexico involves more than relocating a plant: it requires rethinking the business model, logistics, talent management, technology, and regulatory compliance to effectively integrate the North American value chain.
Advantages:
- Mature industrial clusters in the north and the Bajío region.
- Expanding infrastructure: modernising ports, expanding railways, and pursuing strategic projects such as the Interoceanic Corridor of the Isthmus of Tehuantepec.
- Competitive costs and alignment with the United States and Canada in terms of culture and time zones.
Challenges:
- Growing demand for infrastructure
- Environmental requirements
- Saturation in industrial hubs
- Material and legal insecurity
- Strengthening environmental, social, and governance practices
3. Talent, compliance, and technology: operational pillars
a) Talent: Mexico has a young population and is highly skilled in engineering, manufacturing, IT, data analysis, and finance.
b) Comprehensive compliance: Profit-sharing obligations, prohibition of subcontracting, mandatory social security contributions, and extensive digital tax controls.
c) Digital transformation: Electronic invoicing, internal controls, automation, and data protection.
Why do business in Mexico under USMCA today?
- Foreign Direct Investment is at historic levels with growth prospects through 2026.
- Mexico is a production and service platform for North America.
- Unique competitive advantages: location, talent, operating costs, and preferential access to key markets.
- Political and economic coordination with the United States.
- Broad trade openness: more than 14 Free Trade Agreements with 52 countries and 30 Agreements for the Promotion and Reciprocal Protection of Investments.
At Kreston BSG Mexico, as part of the global network Kreston Global, we support national and multinational companies at every stage of the investment process, offering comprehensive solutions that combine global standards with local adaptation.
As North American trade policy evolves, Mexico’s role within the USMCA framework will remain a key consideration for companies evaluating regional investment and supply chain strategy.
