Mexico will fall into recession in 2025 due to tariffs

The Mexican economy will fall into recession this year, and although some recovery is projected for 2026, growth prospects for Mexico are the most punished by the International Monetary Fund (IMF), after the threats and trade measures that in less than three months have been launched by the administration of Donald Trump.

Due to the impact of the tariffs imposed by the United States, the associated uncertainty and geopolitical tensions, as well as greater difficulties in accessing financing, the organization projects that this year the Mexican economy will fall 0.3 percent and that next year it will rebound 1.4 percent.

With these projections, which imply the largest cuts published in the World Economic Outlook (WEO), the IMF points out that no country will be as affected by the uncertainty and trade measures launched by the US administration as Mexico.

In January, the IMF placed its growth forecast for Mexico at 1.4 percent for this year and 2 percent for next year. With respect to those figures, the organization now publishes a cut of 1.7 and 0.6 percentage points, respectively.

The IMF reiterated that it made these projections based on the reciprocal tariffs announced by Donald Trump on April 2, which did not contain a base tariff for Mexico. However, a general tariff of 25 percent on all goods that are not part of the USMCA, one of 25 percent on steel and aluminum -and as part of it on beer packaged in that material-; and 25 percent on cars and auto parts, except for US origin content, are firm on the country.

For Latin America and the Caribbean, the IMF “projects a moderation of growth”, with a growth of 2 percent this year, 0.5 percentage points lower than what was reported in January, and for 2026, a growth of 2.4 percent is estimated, also a rate 0.3 points lower than that contained in the WEO of January 2025.

In explaining the cuts for Latin America and the Caribbean, the IMF explained that these “revisions are mainly due to a significant reduction in growth in Mexico (…) reflecting weaker than expected activity in late 2024 and early 2025, as well as the impact of tariffs imposed by the United States, uncertainty and associated geopolitical tensions, and a tightening of financing conditions”.