Capacity utilization in the Mexican manufacturing sector has historically remained around 80%, reflecting market-driven adjustments, according to data from the Ministry of Economy.

Capacity utilization measures the percentage ratio between actual production volume and maximum (theoretical) potential output. As an operational indicator, it allows for the assessment of structural efficiency, the planning of capital expenditures (Capex), and the anticipation of inflationary pressures or bottlenecks.

Mexican manufacturing

This indicator was included in a letter sent by the Ministry of Economy to the USTR on April 15. In this letter, the government requests that Mexico be excluded from the ongoing Section 301 investigations into structural overcapacity.

The Ministry of Economy argued that the Mexican government does not interfere in decisions made by the private sector regarding the scale of industrial facilities. 

Mexican production capacity is determined by market forces. As part of its rationale, the Ministry of Economy included a graph showing the trend in Mexican manufacturing production and capacity utilization for the 2023–2026 period.

Industrial Support

The data do not show a continuous decline in the capacity utilization rate as would be expected in the event of overproduction. Instead, they show that fluctuations in Mexico’s manufacturing sector are cyclical and demand-driven. Furthermore, the government argued that there is no sustained upward trend in either production or capacity utilization. 

If anything, recent periods suggest a slight downward or flat trend. 

There is no evidence of Mexican measures that have led to the types of structural distortions or excess capacity concerns addressed in this investigation. 

According to the Ministry of Economy, Mexico does not maintain systemic support mechanisms that would lead to persistent excess capacity. In any case, trade balances alone do not constitute evidence of excess capacity. 

The fact that a country can produce a good in quantities exceeding its domestic demand does not necessarily imply the existence of structural excess capacity or distortions. 

Consequently, the Mexican government requested that the USTR exclude the country from this investigation. Mexico and the United States have developed a deeply integrated economic relationship that supports innovation, improves competitiveness, and ensures reliable supply chains.