Mexico enters a potential North American trade war with a lot to lose

A trade war looms over North America as President-elect Trump prepares to take office and impose the tariffs he promised during his campaign.

The three countries have signaled that they will prepare for a commercial battle when they renegotiate their trade agreement (USMCA).

Canada moved the first pieces, distancing itself from Mexico, hoping for better treatment from the US's new administration. Still, that is far from the only economic challenge Mexico will face.

Claudia Sheinbaum must reduce the highest deficit in the last 36 years. Moody's Ratings has lowered Mexico's rating from "stable" to "negative."

The Government has presented a budget for next year focused on social spending. The Mexican president intends to leave this legacy during her six-year term.

Housing prices in Mexico have risen by 39% in just 12 years, compared to wage increases of just 1.2%, plunging the country into a major housing crisis.

One of Sheinbaum's promises is to build one million social housing units for the low-income population, regularize another million homes, and improve approximately 450,000 more homes.

Another goal is to improve the country's connectivity. "Trains mean regional development, jobs, tourism, and shared prosperity," Sheinbaum said in her inaugural address.

For years, Mexico has been associated with "The Beast," the freighting train migrants use on their way to the United States. But that image is changing thanks to unprecedented new investments.

The Maya Train is active and runs through historic and natural sites on the Yucatan Peninsula. It is an ambitious multi-million dollar project that crosses the jungle to connect the poorest areas of Mexico with the most touristic ones.

The environmental impact of the Mayan train on the rainforest in southeastern Mexico is being scrutinized. The project's questionable profitability, which could require many years to recover the initial investment, is also under the microscope.

The education cuts have sparked protests at the most affected institutions: the National Autonomous University of Mexico (UNAM) and the National Polytechnic Institute (IPN).

UNAM said in a statement that such a cut would "affect" 110,000 students in public higher education and jeopardize the quality of their training.

The Mexican Treasury is making severe cuts to health, environment, and culture ministries. The national defense and security areas are also losing power in these budgets.

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