Photo: Photo: Luca Nardone / Pexels / Pexels
New foreign investment in Mexico stalls amid USMCA uncertainty
Record total FDI masks a troubling reality: new money has nearly stopped flowing as trade agreement limbo spooks multinational firms
Mexico’s headline foreign direct investment number looks great on paper. Roughly $35 billion flowed into the country in the first half of 2026, a record. But peel back one layer and the picture gets considerably less flattering: new foreign investment fell 13% year-over-year during the same period, with fresh capital accounting for just 7.8% of the total.
The rest? Mostly companies reinvesting profits they’d already earned in Mexico, not new bets on the country’s future.
The USMCA problem
The core issue traces back to July 1, 2026, when the United States declined to grant the USMCA a 16-year automatic extension. Instead, Washington opted for an annual review process, effectively converting a long-term trade framework into something that feels provisional.
The USMCA covers approximately 80% of Mexico’s exports to the US, meaning the agreement’s rules on tariffs and rules of origin touch nearly every major manufacturer operating south of the border.
Pedro Casas, CEO of AmCham Mexico, captured the mood bluntly, suggesting that investment may stop altogether if the renegotiation process drags on without clarity.
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Auto parts manufacturers, one of Mexico’s most important industrial segments, have reportedly begun evaluating relocation to Southeast Asia.
Greenfield investment tells the real story
According to UNCTAD data, greenfield investment in Mexico dropped to $24 billion in 2025, a staggering 50% decline from the prior year.
That number predates the formal USMCA review trigger, which means the slowdown was already baked in before July 2026. Companies were front-running the uncertainty, pulling back on new commitments while the political landscape shifted.
Compounding headwinds
The USMCA uncertainty isn’t operating in isolation. Rising inflation and slowing global economic growth have already made capital allocation decisions more cautious across emerging markets. Mexico’s pending judicial reforms have also raised concerns about rule-of-law predictability among international firms.
Analysts at BlackRock Mexico have pointed to the lack of long-term visibility as a key deterrent for potential investors.