Mexico Proposes Trade Tariffs, Unveils 2026 Budget and Faces Diplomatic Tensions

Lead Mexico’s government on Tuesday unveiled a draft 2026 budget with expanded welfare spending, proposed import tariffs on automotive and manufacturing goods, and faced a Peruvian motion to declare President Claudia Sheinbaum persona non grata.

Nut Graf The combined fiscal, trade and diplomatic developments underscore President Sheinbaum’s drive to prioritize social welfare, correct trade imbalances and assert Mexico’s foreign-policy stance-even at the risk of straining relations with key neighbors.

Budget Boost for Welfare

  • Finance Minister Edgar Amador presented a 10.19 trillion-peso (US $547 billion) 2026 spending plan, marking a 5.9 percent increase from 2025.
  • Welfare programs would receive 987 billion pesos, an 18 percent rise, reflecting the administration’s “poor first” principle.

Tariffs to “Correct” Trade Imbalances

  • Deputy Revenue Minister Carlos Lerma announced legislation to impose import duties on automotive and manufacturing imports from countries outside free-trade agreements, aiming to generate 70 billion pesos for the treasury.
  • The measures target sectors where Mexico lacks trade pacts, notably China, and will be structured to comply with existing international commitments.

Persona Non Grata Motion in Peru

  • Peru’s Foreign Affairs Committee voted 12-6 to declare President Sheinbaum persona non grata over her support for former Peruvian President Pedro Castillo and refusal to recognize Dina Boluarte.
  • If approved by Peru’s full Congress, the designation would bar Sheinbaum from visiting Peru and heighten diplomatic friction within the Pacific Alliance trade bloc.

USMCA Renegotiation Preparations

  • Ahead of the treaty’s periodic review, Mexico signaled willingness to defend state-owned enterprises and protest U.S. demands on energy, agriculture and intellectual property.
  • President Sheinbaum has hinted at reciprocal tariffs on goods from nations outside USMCA as leverage during talks.

Additional Context

  • The 2026 budget forecasts 1.8-2.8 percent GDP growth, 3 percent inflation and a deficit of 4.1 percent of GDP.
  • Earlier Monday, at least 10 people died and over 60 were injured when a freight train struck a double-decker bus northwest of Mexico City-prompting rail safety reviews.

Subheadings and Bullet Points Fiscal Policy Highlights

  • Total 2026 budget: 10.19 trillion pesos (+5.9 percent)
  • Welfare outlays: 987 billion pesos (+18 percent)

Proposed Tariff Measures

  • Target sectors: auto, manufacturing
  • Expected revenue: 70 billion pesos
  • Compliance with international agreements

Diplomatic Flashpoints

  • Peru’s persona non grata motion (12-6 committee vote)
  • USMCA renegotiation stances on energy and IP

Transportation Incident

  • Date/time: Monday, Sept. 8, ~6:30 a.m. local
  • Location: Atlacomulco-Maravatio corridor
  • Casualties: ≥10 killed, ≥61 injured