Trump’s border orders create uncertainty for Mexico, but do they bring change?

President Donald Trump signing Executive Orders in the Oval Office on 20 January 2025. Image credit: Evan Vucci / AP / Alamy.

President Donald Trump made his presence felt in Mexico yesterday. Within minutes of being sworn in, the CBP One app was pulled offline and US immigration court leaders were fired. Hours later, Trump signed executive orders (EOs) declaring a national emergency at the border. He ordered the revival of the “Remain in Mexico” policy and laid the groundwork for labelling Mexican organized crime groups as Foreign Terrorist Organizations (FTOs). These moves represent an extraordinary political challenge for Mexican President Claudia Sheinbaum but did not immediately change reality on the ground. That’s not necessarily a good thing.

Sheinbaum has rejected the reinstatement of Remain in Mexico. Critics argue Trump cannot bring back the program without Mexico’s agreement. That’s rhetoric. Sheinbaum’s shown willingness to meet tough US demands on migration and will likely continue to. Expect strong language and face-saving gestures, but cooperation. Remember, Mexico’s already running a de facto Remain in Mexico policy, as we reported last year.

Migration and security expert Jacques Coste from Expansión Política, agrees that Sheinbaumn’s team will likely go along with Trump’s migration policies. “They see it as a way to reduce the risk of tariffs,” he says. Underscoring the stakes, Trump again threatened to impose 25% tariffs on Mexico starting February 1st. Although he initially promised tariffs on “day one” which didn’t materialize, the ongoing threat creates uncertainty. This weakens investor confidence. It’s bad enough. Sheinbaum’s team will do what they need to do to keep tariff threats rhetorical and encourage Trump to lift the border emergency declaration.

Trump’s Order on FTOs is a bigger challenge for Mexico. It’s one Sheinbaum has called a “red line.” The EO itself is more mood music than concrete development, because it doesn’t name any specific Mexican group. This could mean FTO designation becomes a negotiating tool, just like tariffs. But if specific FTO designations materialize, Trump’s order could have huge implications for both Mexico and America.

For the US, its businesses will suddenly face new challenges. Coste points out that the linkage between the illicit and legal economies in Mexico is significant, and nearly impossible to navigate. He explains, “There are a lot of companies [in Mexico] who have relationships with the cartels without even knowing it.”

Many legitimate businesses are forced to pay extortion fees. The US Chamber of Commerce reports that 45% of its members in Mexico have faced extortion demands. About 12% said organized crime had taken over parts of their operations. A report from FTI Consulting highlights limited exceptions in FTO law for those acting under duress. Even so, the cumbersome process of proving that means Americans could easily become unintended victims of Trump’s policy.

For Mexican business, Coste highlights the hospitality and tourism sectors in Mexico as being particularly at risk. He doesn’t see overall investment collapsing but warns Trump’s order could scare off new international investment. That would be bad for Sheinbaum, who has identified growth in these sectors to help pay down Mexico’s record deficit, support her expansive social programs, and handle returnees from the US.

But the biggest threat for Mexico is the possibility of unilateral American military strikes on FTOs. Coste sees last year’s arrest of Sinaloa Cartel founder Ismael “El Mayo” Zambada as prologue. Zambada’s capture and clandestine extradition to the US stoked a violent inter-cartel war in Sinaloa state that’s still raging. “This kind of operation can make violence worse,” Coste explains.

The US has tried this in Pakistan, Afghanistan, and Iraq with little success. Unlike those countries, Mexico borders the US and is America’s largest trade partner. Sheinbaum might manage Trump’s Remain in Mexico policy, but the FTO designations are a Pandora’s box. The settled view among US law enforcement and intelligence agencies has long opposed this move.

Here's the upshot. Far from providing clarity, Trump’s inauguration has brought Sheinbaum more uncertainty, not less. But the fact that yesterday’s avalanche of EOs doesn’t immediately change facts on the ground doesn’t help Mexico. The path forward is far from clear.