In this episode, Tavo and Alex sing along to the tune of centuries of nationalism, nation building, and invented tradition.

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

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More on the Conservative-Liberal civil wars of the 19th century, and liberal president Benito Juárez

The role of WWII in Mexican nation building

Mexico is part of that future, as Taiwanese companies look to shift large portions of their production there to keep close to their main market—the United States—and away from the perilous waters of the South China Sea.

While most international investors have been lukewarm about breaking ground in Mexico, a single Mexican consultant claimed in one interview to have already brought over eight Taiwanese computer manufacturers since 2024. Nary a year has passed in which Foxconn hasn’t announced another factory. Today there are 14 spread across northern and central Mexico.

The precipitous rise of artificial intelligence in the US has created in its wake a voracious need for the hardware that keeps all those AI chat bots spewing inanities and driving the stock exchange to historic heights in the midst of a global energy crisis.

Similarly, no trade war or contentious commercial negotiation is scary enough to keep computer electronics manufacturers away from Mexico. Despite its many foibles, it is a country which has the skill, the affordability, and the closeness to the US to make it irresistible.

Mexico, as a consequence, is now shipping out higher values of computing equipment than what was previously North America’s historically most important export, the auto industry. With over 50% of AI-proximate hardware heading from Mexican factories to the US, The Mexico Political Economist has gone as far as to argue that Mexico is the source of US economic growth.

The Mexican press, government, and business sectors have all converged to celebrate around this rare bit of good news. It’s a trap.

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

It would be a mistake to try and declare a definitive souring of US-Mexico relations through one off week.

This bilateral diplomatic relationship is a delicate dance that must be balanced with other considerations. So, when president Claudia Sheinbaum accused the US of trying to meddle in Mexican internal affairs, she was indeed reacting to the actual moves by US law enforcement linking members of her Morena party to cartels. But she was equally trying to keep her left-wing nationalist party united in the face of foreign right-wing pressure.

The US government clearly didn’t see her fiery language as the opening shots in a new US-Mexico conflict. In fact, the Trump administration, instead of shooting back, has recently gone out of its way to talk up bilateral security cooperation.

The following gushing statements that were released over the past week to this effect:

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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:

• Olinia—Many doubted it could be done with such a small budget and in so little time, but the Mexican government-backed electric vehicle (EV), Olinia, was presented yesterday by president Claudia Sheinbaum, as promised, on the eve of the World Cup.
  The boxy vehicle is not meant to compete with Chinese or US EVs, like BYD or Tesla, but rather it is to be in a category of its own:

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How the right became unviable in Mexico is a central theme of the recent book by The Mexico Political Economist’s director Alex González Ormerod—La derecha no existe (pero ahí está). Though the book is in Spanish, here is an excerpt of its introductory essay exploring the Mexican right’s past failures and how it got to its current prospects.

Right by elimination

This book is a bad idea. Several people, respected and admired in public discourse, confided this same opinion to me. One of them deigned to explain why: “What you need to understand is that there is no such thing as ‘the right.’ That’s something the left made up.”

Terrible news for an author trying to write about the nature, current activities, and future of the right in Mexico. However, the last part of that statement stuck with me: “The right is an invention of the left.” Many of those interviewed for this book repeated this phrase to me in one way or another. Perhaps you think so too.

Upon further inquiry, these interviewees insisted that the old ideological divisions are irrelevant in the 21st century and that the left-right divide is a fallacy. The world, they told me, is divided between good and bad government. At the same time, they were adamant in their belief that the forces of evil reside almost exclusively within the political sphere they call “the left.” Thus, not only was the current Mexican government categorically left-wing, but so too—when they acted poorly—were various elements of past PRI and PAN party administrations.

These critics are right in two respects: The political spectrum is insufficient to describe the complexity of politics, and in the case of Mexico, the right is nowhere to be found as an actual political alternative in Mexican electoral politics, at least not anymore.

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

It was president Claudia Sheinbaum’s earliest triumphal moment. Just days after Donald Trump had threatened Mexico with sweeping tariffs (for the first time), the US president walked them back, giving the Mexican president an excuse to celebrate with a massive rally at Mexico City’s most important civic centre, the Zocalo.

What most political analysts remembered from that day, though, was an unfortunate moment in which Sheinbaum’s rivals and hangers-on within the ruling Morena party literally turned their backs on the president to take a photo amongst themselves.

It was likely a simple mistake but the symbolism was not lost on observers. The president who had succeeded Andrés Manuel López Obrador, the all-powerful founder of Morena, looked like a political minnow in comparison; unable to control her former political rivals and unable to pass her own legislative agenda.

That was March 2025. Today, all those politicians are no more—or they are at least much diminished from the empowered state they found themselves in just over a year ago. Each one has since been demoted or booted out from a powerful job. Claudia Sheinbaum has imposed her authority after a reshuffle that began in early April and ended last week.

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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:

• Slim pickings—Last week’s EU trade treaty signature was followed by a €3 billion euro ($3.5 billion dollar) promise to finance future infrastructure projects by the European Investment Bank. Pharmaceutical companies also got together to pledge $1.2 billion dollars in research, medical devices, and strengthening local production. And Carlos Slim sat down for his annual press conference and said he too would be plugging $5 billion dollars into the Mexican economy—mainly in the energy sector.
  These investments have the domestic market in their sights, as ongoing trade talks with the US continue to depress export-driven investment in the country.

• No news is good news?—The only conclusion of the first round of USMCA

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Join Tavo and Alex on this gastronomic exploration through the ages.

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:

A previous episode on pre-Hispanic cultures

Source: Banxico/SE

There are of course others, but with strings attached:

Tourism has inched up year after year but is still a distant third. Oil revenue is still very much a State-run operation in Mexico, so not quite private. Exports are traditionally seen as Mexico’s main source of foreign income, but there are now worries that the current boom is actually a low value-add surge driven by an import glut. And, finally, this report will focus on legal flows, so no cartel money today.

That leaves remittances and foreign direct investment (FDI) as the reigning champions, but their effect on the Mexican economy is significantly different. The raw dollar amounts hide a complex and evolving story.

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

It has been the most underrated trade news development in Mexico for years—probably because it went to plan and without a hitch.

Last week, European Union officials—including president of the European Commission Ursula Von der Leyen—arrived in Mexico City to sign an update of the comprehensive EU-Mexico trade treaty, the Modernised Global Agreement.

It looked and felt like a triumph of the free trade partnerships of years past. The updated treaty now allows 99% of products to be tariff free—including Mexican agricultural exports that EU protectionism held back in the original agreement signed in 2000.

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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:

• INEligibility rules—President Claudia Sheinbaum has put forth a bill that would have Mexico’s independent electoral agency (INE) do the due diligence behind political parties’ candidates. INE will have access to

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Sheinbaum sat at a table with Víctor Rodríguez Padilla and announced his replacement as CEO of Mexico’s State-run oil company with a grim-faced Juan Carlos Carpio. Carpio had just been ascended from being Pemex’s CFO, marking a distinct change in strategy from the one Sheinbaum launched her presidency with.

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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:

• More power to them—The Energy Ministry has continued its call for private investment in electricity generation. Another round of contracts was announced, and for the first time energy storage was put up to bid. Renewables were also up for grabs, confirming that the aim to increase green energy generation from 24% to 38% by 2030 falls almost entirely on the private sector’s shoulders despite the law saying the State must control 54% of electric generation.

• Judicial reform reform—The government has confirmed that the “second half”

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

Two of the Mexican politicians indicted by the US for allegedly working for the Sinaloa cartel have voluntarily handed themselves over. Former Sinaloa security secretary Gerardo Mérida Sánchez and finance secretary Enrique Díaz surrendered to US authorities to collaborate in their investigations against close to a dozen Mexican politicians including Rubén Rocha Moya—until recently the governor of the state of Sinaloa.

They have been accused of facilitating the criminal enterprise of the family of Joaquín “El Chapo” Guzmán—who is also cooperating with US authorities from his cell in New York. By walking into US custody, both the accused seem to be betting on softer sentences in exchange for information.

The turn of events changes things dramatically for the government of president Claudia Sheinbaum.

The debates around extradition and whether Sheinbaum has the political will to go through with handing over her own party members are moot as the accused willingly crossed the border. The question that now emerges is how the president will react as the evidence against the rest of the accused piles up.

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The project cost half a billion dollars. So it was noteworthy that that government didn’t trumpet it as a thumping great success in the framework of Plan México—president Claudia Sheinbaum’s flagship industrial policy—as it has with virtually every other investment announced in the past couple of years.

It is probably because it would have been embarrassing for the government to have taken credit for the terminal. Its construction was the direct result of a massive international legal fight between Braskem and Pemex, the Mexican State’s oil company.

“Pemex was not able to supply sufficient volumes of ethane gas that it had committed to,” Cleantho Leite—until recently a Braskem director—told The Mexico Political Economist. Starved of ethane, Braskem’s $5.2 billion dollar complex was slowly grinding to a halt and with it Mexico’s supply of locally made polyethylene—the substance that makes up 30% of the global plastics market.

“And so, we had this big petrochemical complex running, initially at 90%, then at 85%, then at 80%, then at 70%,” said Leite. By 2021, Pemex was supplying just half the agreed upon supply.

“Pemex paid penalties for this undersupply for a while. And then at some point, it stopped,” Leite said. “We almost went into international litigation. And as a solution, Pemex agreed to concede some space in the Coatzacoalcos area to build a terminal to allow for the importation of ethane from the US. And that was a major project, which ended up being a new company called Terminal Química Puerto México. A $500 million-dollar investment concluded just now at the end of 2025.”

It was an embarrassing episode, but unfortunately not an isolated incident. Across the entire petrochemical sector, the Mexican government and the private petrochemical industry are in a lethal embrace, slowly suffocating each other but unable to let go.

This is the story of how they got to this point—dragging the rest of the Mexican economy with them.

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

The Mexican economy is shrinking. Job creation is nowhere near the rates needed to keep unemployment down or underemployment at bay.

Against economic logic, consumption is still up. The argument that a higher minimum wage may be buoying consumption is losing currency as the big increases of the past fade into the distance. Indeed, for a while now higher wages have had the peculiar effect of boosting retail sales while keeping profits low.

Consumption is cooling, just not at the rate expected given the economic slowdown. Beyond the minimum wage, another trend seems to explain this effect.

In the first three months of 2026, consumer credit went up by 7.2%. Car sales were also up—by 3.7%—but it was the car loans that were really booming—they grew by 11.2% in the first quarter of 2026.

Traditionally, financial institutions did not give credit to the average Mexican. Banks seem to be loosening their previous standards—AI and hyper-personalisation of products are given as the reason for which they are taking greater risks. There seems to be another big reason for Mexico’s sudden boost in consumer credit.

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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:

• That’s a wrap!—Thank you to all those who sent in applications for The Mexico Political Economist’s Project Lead position. Watch this space as we look forward to launching the Plan México Project.

• Mexico-Canada Strong—Mexico’s Economy Secretary assured a Canadian audience that bilateral trade would remain free—despite ongoing threats from the US. Both countries promised to not fray in their common push to preserve the US-Mexico-Canada Agreement (USMCA).
  These declarations of mutual affection occurred during a Mexican reciprocal trade mission to Canada. There, over 200 businesses signed a wide spread of

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The left-wing opposition back then—the people that would one day become today’s ruling Morena government—accused these nefarious neoliberals of gutting the State and putting all the onus of investment and economic growth on a private sector empowered by deregulation. Plan México was supposed to mark the return of State initiative in the economy.

Many months have passed, and concern had started to mount that the ambitious Plan wouldn’t go beyond the drawing board. Until this past Monday, when president Sheinbaum and her cabinet—the heirs of that progressive critique—presented specific policy points to be put in action immediately to drive investment in the country.

If deployed in the way they were announced, these actions will constitute one of the most significant bureaucratic upgrades in years. They would also make Ronald Reagan, Margaret Thatcher, Elon Musk, and Javier Milei very proud.

Plan México 2.0: A breakdown

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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:

• Applications close today—Send yours for an opportunity to become The Mexico Political Economist’s Project Lead for the Plan Mexico Project.

• And in with the new—Technically, the nation’s president was not meant to be a protagonist at the ruling Morena party’s national congress last week. Claudia Sheinbaum resigned from it on ascending to power. Yet, her fingerprints could be seen across the party’s new leadership election:

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

Speculation is at a high as the governor of Sinaloa Ruben Rocha Moya, along with the mayor of its capital and a federal senator from the northwestern state, were issued indictments by the US. In total, 10 current and former Mexican officials have been charged with drug trafficking and weapons offenses in league with the Sinaloa cartel.

In a rush to fill up newspapers with content, analysts in Mexico have overthought the political machinations in the US concerning this case. Some predict that Trump is behind the indictment; a step in his plan to “do a Maduro” on Mexican soil. Others say it is a ploy to get the Mexican government to bend the knee lest it justify an excuse for direct US intervention against cartels.

Though one mustn’t discard even the most outlandish options with the Trump administration, in all likelihood the truth is that the Southern District Court of New York has most likely been working on this case since the Biden administration whisked one of the main bosses of the Sinaloa cartel into US custody. It is well known that this kingpin, along with prominent criminal leaders such as El Chapo, have been feeding information to investigators.

Despite the Mexican government’s rejection of the indictment on the ground that it doesn’t present enough evidence against ruling Morena party-affiliated politicians, it is likely that the case is tight enough to warrant going after such high profile foreign figures.

The slow bureaucratic gears of US justice have finally churned out a decisive conclusion. The ball is now in the court of Mexico’s even slower judicial machinery. The possible outcomes depend on a few convoluted but limited paths:

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