Trump’s Trade War Boosts Growth Outlook at Mexico Shipping Firms

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(Bloomberg) — Oversized flags from three countries dominate Oscar Del Cueto Cuevas’ office in Mexico City: one from the US, another from Mexico and the last from Canada. 

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For the president of Canadian Pacific Kansas City’s Mexico operations, the flags are a symbol of CPKC’s $31 billion bet on a deeply intertwined North American economy, one that seems to be paying off in the face of President Donald Trump’s tariff war.

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In March, as Trump escalated threats of sweeping new duties on Mexican and Canadian imports, Del Cueto was unfazed. “Our position is that we will continue our investments,” he said at the time. “They will not be stopped by this issue.” 

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One month later, after Trump excluded Mexico from the latest round of retaliatory tariffs, Del Cueto appears to have been proven right — and he’s not the only one.

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Rather than pulling back, major logistics and shipping players are doubling down on Mexico. Even with political risks and economic headwinds, the US’ southern neighbor remains a critical link in the North American supply chain. 

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DHL just finished a $120 million expansion at its Querétaro air hub, according to a company representative, making it the largest DHL Express shipping center in Latin America. CPKC is launching a refrigerated train service to move produce north and protein south. And US freight management firm ECHO Global Logistics Inc. opened new headquarters in Mexico City in March, with plans to double its cross-border shipping volume. 

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“I think we’ll see more growth in regional trade even though early indications were that this was going to have a negative impact for Mexico and Canada,” Troy Ryley, ECHO’s Mexico president, said in reference to US tariffs. “We’re not slowing down. If anything, the discussions are more about how we can accelerate growth.”

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Trump’s return to the tariff lever has rattled global markets, but Mexico is enjoying something of a rare exemption, at least for now. Earlier this month, the US left Mexico and Canada off a new list of retaliatory tariffs hitting imports from most of the world, instead keeping them on a 25% tariff that fully excludes goods traded under the US-Mexico-Canada Agreement, or USMCA. A separate 25% auto tariff remains in place, though it applies only to foreign-made portions of a car shipped under the USMCA.

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Markets responded swiftly. The Mexican peso strengthened following the announcement, and Mexico’s stock market surged to its highest level since July. HSBC strategists including Alastair Pinder said in an April 9 note that higher US tariffs elsewhere make Mexico an even more attractive investment destination. 

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But the growth is tempered by broader challenges. Mexico’s central bank is weighing the possibility of a recession, and under the baseline scenario, it’s predicting the economy will grow a meager 0.6% in 2025. 

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Prolonged tariff uncertainty hasn’t helped investor sentiment. Some businesses are under pressure from the Mexican government to reduce imports from Asia, while others have scaled back expansion plans due to concerns they could be targeted with new export fees.