The impact of tariffs in Mexico and Canada has weakened the economies of both countries, according to IMEF, Inegi and the Fed.
For starters, the Fed reflected this outlook at the joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System on May 6, according to the minutes.
That meeting posited that indicators of foreign economic activity pointed to a moderate pace of U.S. expansion in the first quarter, likely driven in part by anticipated demand from U.S. importers in anticipation of tariff hikes.
However, more recent indicators suggested a weakening of momentum, especially in Canada and Mexico, amid heightened uncertainty over global trade policies.
Impact of tariffs in Mexico and Canada
According to the Fed, inflation abroad remained close to central bank targets in most foreign economies, in part due to lower energy prices. In contrast, Chinese inflation remained fairly subdued.
At the same time, the European Central Bank, the Bank of Mexico and several emerging Asian central banks eased monetary policy, citing in part the potential drag on domestic growth from U.S. tariffs. In their communications, foreign central banks also emphasized the need to maintain policy flexibility amid heightened uncertainty.
On the other hand, the IMEF Manufacturing and Non-Manufacturing leading indicators for May continue to reflect a stagnant Mexican economy.
Although both indicators showed advances with respect to April, their levels remain below the expansion threshold (50 points). The manufacturing indicator stood at 47.4 points (+1.9), while the non-manufacturing indicator reached 49.4 units (+0.3).
Inegi’s release of the IGAE, as of March, confirmed this deceleration trend. The indicator surprised on the downside, accentuating the weak profile with which it closed the quarter.
Among the most relevant components, manufacturing began to show a clearer deterioration, partly explained by the uncertainty surrounding international trade. Although the risks of a trade escalation seem to have moderated recently, the trade situation continues to generate volatility in production and export decisions.
Manufacturing
Inegi and the Bank of Mexico released this Monday the Manufacturing Orders Indicator (MPI) for May 2025.
With seasonally adjusted data, the WPI registered a monthly reduction of 0.7 points and stood at 50.0 points, after having been above that level for nine consecutive months.
Within the WPI, monthly declines were observed in the components referring to expected orders, expected production, employed personnel and the timeliness of the delivery of inputs by suppliers. The input inventories component increased.