Key Moments
- USD/MXN moved back below 17.00 as Mexico and the US engaged in trade discussions amid a widening US-Canada trade dispute.
- Mexico’s car imports from China declined 31.1% year-on-year in 1H26 to 158,571 units following tariff changes aimed at preserving roughly 350,000 domestic jobs.
- Mexico’s manufacturing PMI slipped into contraction, dropping to 49.8 in August from 51.3 in July.
Trade Developments Underpin Peso Strength
Societe Generale notes that USD/MXN has retreated below the 17.00 level as Mexican authorities intensify trade discussions with the United States, in the context of a widening trade rift between the US and Canada. According to the bank, these developments have provided support for the Mexican Peso against the US Dollar.
The bank highlights that trade policy has become a key factor for the currency pair, with Mexican officials actively engaging with US counterparts to address bilateral trade issues.
High-Level Meetings and Policy Actions
Societe Generale points to recent diplomatic engagement as an important backdrop for the Peso’s performance:
“USD/MXN returned below 17.00. Economy Minister Ebrard met US Commerce Secretary Howard Lutnick at the sidelines of the G20 summit to discuss trade after the widening of the US-Canada trade rift.”
The meeting underscored Mexico’s efforts to position itself constructively amid regional trade tensions and to safeguard its economic interests through dialogue with US officials.
Impact of Tariffs on Auto Imports
Adjustments to Mexico’s tariff regime have had a visible impact on trade flows, particularly in the automotive sector. Societe Generale reports that measures were implemented with the goal of protecting local employment from what were described as unfair trade practices.
“Ebrard said that Mexico car imports from China fell 31.1% yoy in 1H26 to 158,571 units following tariff adjustments that were designed to protect roughly 350k local jobs from unfair trade practices.”
| Indicator | Period | Value |
|---|---|---|
| USD/MXN level | – | Below 17.00 |
| Car imports from China | 1H26 | 158,571 units |
| Change in car imports from China | Year-on-year | -31.1% |
| Local jobs targeted for protection | – | Roughly 350,000 |
| Manufacturing PMI – July | July | 51.3 |
| Manufacturing PMI – August | August | 49.8 |
Political Signals and Trade Outlook
Market sentiment toward Mexico’s trade prospects has also been influenced by political commentary. Societe Generale cites statements from the Mexican presidency as supportive for expectations of continued progress in trade negotiations.
“President Sheinbaum expressed optimism of reaching an agreement on trade the US soon.”
This expression of confidence comes as authorities seek to manage external risks arising from regional trade frictions and to maintain a favorable environment for the Peso.
Softening Manufacturing Activity
While trade-related news has provided some support to the Mexican currency, Societe Generale also flags a deterioration in manufacturing activity as a potential counterweight.
“On data front, the manufacturing PMI returned to contraction mode, falling to 49.8 in August vs 51.3 in July.”
The shift back into contraction territory underscores a more cautious backdrop for growth, which investors may weigh alongside trade policy developments and currency movements.
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