MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

Uncharted Mexico: Extractive expansion

Mexico’s exports have hit another historic high. The Mexico Political Economist has covered how much of this boom is down to the AI-driven demand for Mexican assembled computers. One that does not generate much value in Mexico.

There is another sector whose export value has grown at double the rate of computers—so called “extractive exports.”

Source: INEGI

These, in the Mexican statistical classification system, are the non-oil products mined from the ground. Mexico’s main extractive exports are gold and silver, which have seen big dips in price throughout 2026. So, how has the value of mining exports grown so significantly in this same period?

The main driver of growth over the past six months has been copper, which has not only continued to steadily appreciate over the past year, but has also seen big upticks in export volume. Mining companies and refiners, like Grupo México, are tapping into their reserves to cash in on the glut. A glut caused in large part by… the AI boom demand for copper.

Exports of lead have grown by triple digits in 2026, but Mexico’s monthly copper exports are comparable to a year’s worth of lead exports. Overall, extractives made up less than 2% of the value exports last year. Today they are 2.9%.

Last week’s highlights:

• Capone me once…—Donald Trump is claiming a finder’s fee on all of Ismael “el Mayo” Zambada’s wealth, after the cartel kingpin was sentenced to life in prison in the US. That’s if he can get his hands on it… A US federal judge has ordered the decommissioning of $15 million dollars. The only issue is that none of el Mayo’s alleged wealth can be found under his name, said Mexico’s security secretary Omar García Harfuch.

• New wave—Mexico is expecting a new wave of tariffs from the US. Forced labour rules are to come into force—these could block shrimp exports—while production “overcapacity” tariffs could hit Mexican manufactures generally. Nevertheless, according to a study by Global Trade Alert, Mexico is one of the countries least affected by these tariff updates thanks to the USMCA.

• Oil theft economy—Huachicol—oil theft—continues to concentrate the attentions of the Mexican government a week after a former governor was arrested for the crime. This time a makeshift refinery operated by organised crime was discovered. A 100,000% increase in imports labeled as calcium chloride was also found to be a cover up for even more stolen fuel.

Don’t get distracted by… A leaked Mazzucato document

Last week, a presentation by UCL economist and advisor to the Sheinbaum administration, Mariana Mazzucato, was criticised widely by the opposition. This analysis of Mexico’s industrial policy apparently was a leak of a working document presented for further discussion with the Mexican government, a person with knowledge of the issue told The Mexico Political Economist. A more complete study will be published soon.

Local zoom in on… Hangover from 2024 in Tequila, Jalisco

The threat of plague looms over Mexico’s tequila plantations as millions of tonnes are abandoned in the fields. A glut in agave planting (the core component of the drink) in 2024 has led to a collapse in prices which have fallen by 92% in a year. This makes just harvesting the agaves unprofitable, leaving them open to pests that grow on the fallow plantations only to spread to the rest.

Though sales of tequila grew last year, volume has fallen. The Mexican government in part blames tariffs for this; with the economy secretary Marcelo Ebrard pointing at “some countries” that have up to 150% import fees on tequila. He is now threatening reciprocal tariffs in response.

The Big News Breakdown. Unpacking this week’s most important news.

Third round’s the charm. This time US-Mexico-Canada Agreement (USMCA) negotiations between Mexico and the US happened in Mexico City. US Trade Representative (USTR) Jamieson Greer and his team met with president Claudia Sheinbaum to discuss what a revamped regional trade acceptable to the Trump administration might look like.

These are the main demands so far:

More North American content (if the US gets to keep most of it)

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MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

Uncharted Mexico: A governor finally falls

Ernesto Ruffo, former governor of the border state of Baja California (1989-1995), was arrested for “fiscal huachicol”—the practice of smuggling (often stolen) fuel without paying taxes. The hand of the law was swift, critics suspect, because Ruffo is a well-known opposition figure of the right-wing PAN party. Meanwhile, other ruling Morena party governors accused of collaborating with cartels have been left untouched.

Cartel nobbling is one thing, but to president Claudia Sheinbaum, corrupt tax evasion is personal. She has gone to great pains with the progressives in her own party and beyond to argue against passing a progressive fiscal reform. Instead of taxing the rich, she has argued, Mexico should simply charge all the taxes that are evaded.

In the context of this debate, the sheer scale of the fuel theft crisis shows how much money the Mexican State has lost out on through corrupt tax evasion.

The fuel theft investigation continues more vigorously at lower echelons, with prosecutors turning their attention to the Army after scrutinising the Navy for huachicol. Two lieutenant colonels and a lieutenant of the military police who worked on the Matamoros customs office were arrested last week.

Last week’s highlights:

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The Big News Breakdown. Unpacking this week’s most important news.

Initially, coverage of the World Cup in Mexico reverted to the lens of cartels. It was as lazy as it was expected from the global media. Attention then shifted to the similarly awaited angle of the broader issues surrounding World Cup preparations—last minute renovations and the usual exclusion from the festivities of small businesses and the working class neighbourhoods surrounding the stadiums.

So far so predictable. But that didn’t stop Mexico from making the most of the world’s biggest event; especially one peculiarly split up amongst its fellow regional trade partners and neighbours—the US and Canada.

“Sport diplomacy” thus became a fixture of think tank and diplomatic circles over the past months, using football as an excuse to talk up the virtues of a united North America. The usually pro-regionalist discourse came as a welcome palette freshener from the concurrent—and somewhat more sour—negotiations surrounding the US-Mexico- Canada Agreement (USMCA). Just last week the Trump administration (predictably) repudiated the trade treaty in its current form.

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MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

Uncharted Mexico: Intervention

After falling for 19 months, fixed investment grew for the first time in Mexico. Not only that, it shot up significantly.

Source: INEGI

As always though, there are caveats.

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Don’t worry though. We know the news continues to unfold, so our weekly MXPE Essentials and our Big News Breakdowns will continue as usual. Just keep an eye out for the exciting investigations we’ve got ready for you in early August.

In the meantime, and now that we’re on the subject, do tell us how your reading habits change (or don’t) during the summer break:

Stay hydrated and cool!

The Big News Breakdown. Unpacking this week’s most important news.

Claudia Sheinbaum’s administration has been taking far more aggressive legal action against the US government and its officials in recent days.

First, Mexico reacted with anger after Immigration and Customs Enforcement (ICE) agents killed a Mexican in their custody. As opposed to the tepid diplomatic notes that have characterised the previous responses to ICE brutality, the promise is now to take “more forceful legal measures,” said Sheinbaum.

These have been speculated to involve direct legal action against ICE in the US or support of class action suits filed by victims and their families.

The Mexican government has also committed to a full investigation—run by the federal attorney general and Sheinbaum ally, Ernestina Godoy—into whether the capture of notorious drug lord, el ‘Mayo’ Zambada, involved meddling by US authorities on Mexican soil.

From the very beginning, Sheinbaum expressed concern about US involvement, but it is only now, two years later, that the government is mobilising legally.

Perfect timing

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Mexico: The Podcast is also available on Spotify, Apple Podcasts, and YouTube. Leave us a review and a comment, and for even more insider insights on Mexico, subscribe to www.mxpe.org

Mentioned in this episode:

The wonders of chile biodiversity

Axolotls in Chapultepec park

Meanwhile, the resistance against the physical damage wrought by AI is already here. In the US particularly, protests now erupt every time a data centre is announced. Locals worry about the emissions from these giant buildings, their consumption of water, their maddening non-stop hum.

Investors, looking to avoid NIMBYs in the US, are now pushing the construction of data centres on other countries, selling them as a great economic opportunity.

The Mexican government is sold: On announcing a new giant data centre in the state of Querétaro, economy secretary Marcelo Ebrard referred to it as “a sort of highway for everything to do with artificial intelligence in Mexico. We’re building those highways and bridges so we can get that new economy to work.”

Mexican businesses don’t even use AI. In a recent paper, Gilberto García-Vazquez, chief economist at the Net Zero Industrial Policy Lab (NZIPL) and an expert in AI infrastructure, noted that “fewer than 3% of Mexican businesses have incorporated artificial intelligence.” The number of those that use it effectively is likely much lower, so—barring an unlikely cultural revolution—Mexico would only stand to benefit in the short and medium term from the economic outputs of the physical infrastructure itself.

Mexico’s closeness to the US—AI’s main market—and its eagerness to attract investment may have positioned it to be the next big site for data centre construction. It also exposes it far more to its negative effects—drought, energy scarcity, poor data protection—all add up to make a perfect shit storm.

The path of outright rejection isn’t all that viable either: In a country with virtually no economic growth and the looming threat of poverty for millions, to opt out of what may well be the next Industrial Revolution would be to willingly bow to economic submission for the rest of the 21st century. (Indeed, some of the greatest historical disasters in Mexican history could well be described stemming from failures to modernise—see the 1846 US invasion of Mexico—or to modernise equitably—see the Mexican Revolution.)

But what if Mexico could have its AI cake and eat it too? The AI infrastructure boom hides another genuine industrial revolution in plain sight. Parts of Mexican industry are already exploiting it. For the gains to be felt widely it will take a concerted effort by local Mexican business, investors, and the State to avoid missing them and ending up stuck only with the worst AI and data centres have to offer.

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MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

Uncharted Mexico: It’s the geopolitics, stupid

Structurally, China lies at the heart of Mexico’s surging surplus.

On the demand side, Mexico’s tariffs on many foreign goods, along slowing consumption, has reduced the need to import as much from Asian countries. Meanwhile, on the supply side, exports to the US are booming as Donald Trump’s own trade war with China has allowed Mexico to fill the void.

Non-automotive manufactured exports have been growing at rates of between 20 to 34% month-on-month since late last year.

But the most immediate change in Mexico’s trade balance has a lot to do in the short term with conflict in the Middle East. For the first time in a while, Mexico’s oil exports have been doing pretty well—not in terms of volume but for the high prices it has been able to sell crude and refined petrochemicals for.

All of this is somewhat awkward as USMCA negotiations hang on Trump’s concerns regarding the US trade deficit with its neighbours.

Source: INEGI

Last week’s highlights:

• End of auto pilot—As opposed to most other sectors, the auto industry in Mexico continues to flag.

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The Big News Breakdown. Unpacking this week’s most important news.

Poor behaviour from media who should know better at this stage in the game. Headlines proclaiming: “Trump Refuses to Renew USMCA” set off panicked conversations as if the US-Mexico-Canada Agreement (USMCA) had concluded forever.

The reality is this:

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The main fault line in the rail sector has not always fallen between the public versus the private sector. This fight is actually relatively new. Its origins stem from the mid-90s, when the Mexican State privatised rail services whilst keeping ownership of the rail itself. This hybrid model was very much in the spirit of its time, as Mexico struggled to transition from a closed nationalist to a market economy.

Before that the Mexican government ran and operated the country’s trains. The fight between the 1940s to the 90s was between the State and the unions. That impasse was broken through government co-option of union leaders but also by shifting investment to the roads. Motorways were not only far cheaper to maintain but the freight ecosystem on them was more decentralised, segmenting haulers’ unions.

Cars and lorries felt like the future. Pouring more tarmac was a quick and easy way for governments to show they were modernising. In the 1940s, there was the same amount of rail and road infrastructure—about 20,000 km—“but from then on the road network exploded,” Alejandro Álvarez, former head of Mexico’s Rail Regulatory Agency (ARTF) between 2018-2021, told The Mexico Political Economist, “and while rail stayed in the 20,000’s there are now over 400,000 km of road.”

Before the road boom, before the massification of the motorcar, before the Mexican Revolution of 1910, trains ruled and it was the private sector that dominated Mexico’s railway system. The 1890’s until 1910 were the peak decades of the dictatorship of Porfirio Díaz, whose pro-business, pro-foreign investment agenda unleashed private capital, resulting in a massive expansion of Mexico’s rail.

But the free market was always an illusion. The decision to let rail expand through private investment was contingent on repression and union busting by the Porfirian authorities. Its growth also required an ideological switch. Before opening the taps of private investment, Díaz first had to repeal previous Mexican policy that instituted by former president Sebastián Lerdo de Tejada. Díaz’s predecessor saw the expansion of rail to the north of Mexico, through its connection of the country to the US, as a risk to national security. “Between strength and weakness, the desert,” is the phrase attributed to Lerdo to justify this position.

Díaz opened the door to the foreign capital that developed and populated the vast and previously remote northern borderlands of the country through rail. It was on those very same trains and those very people that the Mexican Revolution swept down from the north to boot Díaz out of power in 1910.

Rail cannot help but be political. The present day is no different, both in the sense that politics continuously incursions into the way Mexican trains run and in the way policy around trains is always shaped by the zeitgeist of the time.

Today, for the first time since the Mexican Revolution, the Mexican government is trying its hand at both passenger and cargo rail. Especially under president Claudia Sheinbaum’s administration, trains are seen as a core vehicle for redistributing economic development geographically and for driving growth across Mexico as a whole.

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The Big News Breakdown. Unpacking this week’s most important news.

It is almost impossible to create a new political party in Mexico. Every six years a small but hectic year-long window is opened for organisations to jump through hoops set by Mexico’s electoral agency (INE). Out of the 86 that started the process in January 2025 just two have made it to the end.

The requirements were grueling. Organisations mobilised thousands of activists to gather millions of signatures (spending millions more pesos) to obtain their registration.

The benefits of being a party, however, are more than worth the strenuous costs.

Source: INE via Integralia

Who’s who in the final two

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MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

Last week’s highlights:

• Google vs Mexico’s tax authority—A judge has exempted Google from having to share user information with the country’s tax authority (SAT). The move has prompted the ruling Morena party to call for expanded rules on digital privacy.
  Since the arrival of president Claudia Sheinbaum to power, the SAT has been on an aggressive collection spree, in the hopes of getting ahold of tax evaders. In 2026, a law was specifically passed to identify those offering digital services without paying tax on their income.

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Mexico: The Podcast is also available on Spotify, Apple Podcasts, and YouTube. Leave us a review and a comment, and for even more insider insights on Mexico, subscribe to www.mxpe.org

Mentioned in this episode:

History of Mexican mining

How American football influenced Mexican football (soccer)

Shoddy or saturated infrastructure adds to logistical costs. So do security considerations—companies will either hire private guards or wait to be escorted by the armed forces through criminal choke points around the country. And that’s all before considering that Mexico is currently experiencing a 90,000 truck driver deficit.

Trains bypass all these issues. They have an incredibly low theft rate. A single train moves what 300 lorries can, and they’re 75% less polluting per tonne to boot. Yet rail freight accounts for less than a quarter of what is moved by road.

President Claudia Sheinbaum has made trains a flagship policy. A lot of her government’s emphasis has been put on the revival of passenger rail, but her ambitions extend to cargo. She’s made the sector a target of government policy for the first time in decades with an eye to unlocking much needed economic growth across Mexico.

The president has her work cut out for her. Beyond the vast rugged landscapes of mountainous Mexico, the government’s ambitions are set to be thwarted at every sleeper by the current state of rail’s economics and the politics that surround it.

As usual, at the heart of this tension lies a tussle between the State and the private sector over the best way to run Mexico’s trains, as The Mexico Political Economist found on speaking to a dozen high-level transport officials, top rail executives, and independent railway consultants.

Despite these challenges, the president wants to add 3,000 kilometres of track to the network’s existing 28,864 km. Considering rail has grown by fewer than 10,000 km since the 1910 Mexican Revolution, this is a tall order.

“The past sexenio [six year presidential term] built 1,500 km with the Maya Train and not even all of that is fully operational,” Carlos Sierra, a rail consultant at Ecourba—an independent mobility consultancy—told The Mexico Political Economist. “I’m not complaining about president Sheinbaum’s plans; they just verge on being too ambitious.”

Luckily, the private sector is determined to work with the government. “The president’s vision—I believe her flagship project—is that of passenger trains. We’ve been working very closely with them, above all to ensure that freight can grow in the areas where passenger rail is growing and vice versa,” Óscar Del Cueto, president and executive representative of CPKC de México—one of the two companies that dominate Mexican rail freight in the country—told The Mexico Political Economist. “We want this project to be successful. And in that sense, we’ve been working and collaborating with the whole government.”

So, that might be the end of it! It seems like the public and private sectors have put their squabbles behind them to allow Mexico to at last turn to the monumental task of updating Mexican rail from the 19th to the 21st century. Not so fast…

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The Big News Breakdown. Unpacking this week’s most important news.

Two seemingly linked statistics featured in the Mexican press last week:

The first was one that president Claudia Sheinbaum would like people to keep in mind: The continuing fall in violence across the country. According to official figures (which The Mexico Political Economist has explained are independently verifiable enough to be credible) the country’s murder rate has fallen by 46% since September 2024.

The other stat is one the government isn’t so keen about.

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MXPE Weekly Essentials. Only the most important news in Mexican politics, policy, and markets from the past week.

Last week’s highlights:

• Too big to fail—Concerned about the small size of the applicants to its mixed renewables infrastructure projects, the Mexican government is requiring potential investors to up the size of their bid bonds to $10,000 dollars for every megawatt they seek to offer. The condition is for applicants to prove their solvency given the large cashflows, time frames, and investments required by these energy projects.
  These include plans for up to 15 new wind farms that need to be up and running by 2030 at the latest and which will require a capital injection estimated at $5 billion dollars.

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To many, this World Cup’s inaccessible stadium ticket prices, obsession with ads, and infamous hydration breaks smack of the culture surrounding American football. The National [American] Football Association—the NFL—and its Mexican fans would balk at the comparison. Not only because the two sports have had long rivalry spanning over a century in the country, but because, whilst Mexicans have reported feeling down on FIFA, the business and pastime of American football in Mexico is on the up and up despite the sport’s hefty pricing.

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The Big News Breakdown. Unpacking this week’s most important news.

Blithely ignorant of the lessons of previous crashes and blinded by the promise of new technology, US entrepreneurs poured their resources into exponential expansion. When they ran out of money, they borrowed it in ever-growing sums. When the US market became too constraining, the investors turned their eye to Mexico.

The pattern of tech bubbles is so consistent that the playbook of the railway tycoons of the late 19th century sounds strikingly similar today. Railway infrastructure spilled over into northern Mexico as the US robber barons of the Gilded Age ran out of space across the enormity of the continental United States.

As the globe undergoes a new technological boom, Mexico has become a different sort of actor under the aegis of artificial intelligence. It’s no longer just a site for building the new technology’s infrastructure—rail back in the late 19th century, data centres in the early 21st—it is also where funds and asset managers have come looking for fresh capital.

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