With geopolitical tensions between the US and China forcing businesses to diversify supply chains, the country’s stability, low labour costs, and geographic proximity have raised hopes that a “Made in Mexico” moment is at hand.

But if US demand for tangible goods slows, and vehicle prices flatline, export growth won’t continue at the pace that has been set over the last year. Under López Obrador, energy policy has become less flexible and even less climate-friendly, limiting the extent to which companies with net-zero commitments can relocate production facilities. Critical regulatory bodies remain captive to political whims. And the country devotes an incredibly low share of gross domestic product to research and development, putting constraints on how far factories can move up the value chain – particularly relative to the Asian tigers located closer to China. We suspect that markets will ultimately revise expectations for inward investment flows lower.

US imports by country, %