US - Mexico summit: a “Munich moment” for Mexican business amid looming dangers
President of the Business Coordinating Council (CCE) Francisco Alberto Cervantes Diaz, CEO of Mexico Pacific Sarah Bairstow, Mexican President Claudia Sheinbaum, Chief Executive Officer of the U.S. Chamber Suzanne P. Clark, Mexican Minister of Economy Marcelo Ebrard, Vice Chairman of the Board of Directors of Tenaris Guillermo Vogel pose for a picture during a press conference in Mexico City, October 15, 2024. Image: REUTERS/Raquel Cunha
Claudia Sheinbaum convened the 14th US-Mexico CEO Dialogue on Tuesday, showcasing foreign investment to ease concerns over Mexico’s judicial reform. President Sheinbaum, alongside Economy Minister Marcelo Ebrard, met with top Mexican and US business leaders, as well as US Chamber of Commerce President Suzanne Clark. The headline: $20 billion of investments, with Clark hailing Mexico as America’s top trade partner. Ebrard reassured attendees their money was safe despite uncertainties around the reform.
This summit took place against a backdrop of near record violence in Sinaloa, which Sheinbaum downplays, and a falling peso that’s wiped out any gains since her October 1st inauguration.
The summit was “a Munich moment for the private sector,” said one influential figure in Mexico’s business community, speaking anonymously to discuss the event freely. “Ebrard completely neutralised the Mexican private sector and had it eating from his hand.”
It’s not surprising then that Sheinbaum painted the summit as a win. But it’s hard to buy that. Most of the investments were old news, and these kinds of vague promises don’t always pan out. Take Amazon, for instance. Back in February, they pledged $6 billion over 15 years. Now it's been rebranded as $5 billion over two years—without explanation. And when a government has to promise to respect property rights, it’s not exactly a great sign.
Then there’s the US election in November. A Trump win spells trouble, given his threats to slap heavy tariffs on Mexican imports. CEOs might hold off on big commitments until they know if he’s serious. That could drag out, putting Mexico in a tough spot. Harris won’t go as far but could play hard ball during the USMCA review.
The US Congress could also make trouble. They’ve been on recess since late September. Once they’re back, Mexico’s expropriation of Vulcan Materials’ site in Quintana Roo could get some attention. Vulcan employs a lot of people in Alabama and Virginia. Senators Richard Shelby (R) and Tim Kaine (D), with their seats on key committees, could decide to make some noise about it. Former President López Obrador’s decision to seize Vulcan’s property was rash. It could yet trigger bipartisan pushback that Mexico isn’t prepared for.
This was Sheinbaum’s first diplomatic engagement. It felt intended for domestic audiences, highlighting the President’s sensitivity to domestic concerns over the judicial reform more than US business confidence in Mexico. Mexico’s problems are bigger than one reform. This summit doesn't shift the fundamentals around foreign investment. Multiple other constitutional reforms, either enacted or underway, also violate USMCA. These include the energy, regulatory, mining, and agricultural sectors. Much of what will shape investment in the coming years is either decided or out of her control.
Before the summit, we saw Mexico’s Senate use a tombola to determine which judges go before the electorate first – hardly a sign of stability or seriousness. Sheinbaum and Ebrard put on a slick show. Ebrard hasn’t always had an easy relationship with the President. He’s proven his worth with this week’s performance; there’s definite political gain here for the Government. Regardless, they need more than red carpets and polished press conferences to make Mexico’s nearshoring dream reality. At this point they’re operating on a wing and prayer.