In the first 20 days of Mexico's new six-year government, the president of the National Chamber of the Iron and Steel Industry (Canacero), Víctor Martínez-Cairo Gutiérrez, said that it is urgent to implement an industrial policy of incentives for private investors to increase national content, according to local press reports.
The leader of the Mexican steel industry urged the federal government to urgently generate public policies that generate certainty for its USMCA trading partners and demonstrate that there is no triangulation of steel from China via Mexico to the United States, the newspaper Reforma reported.
Martínez-Cairo Gutiérrez's words come a few days after it was revealed that the Ministry of Economy is considering granting tax incentives for investment in some economic sectors to move their production from Asia to Mexico.
Claudia Sheinbaum’s six-year presidential term began on October 1. The current government's analysis of tax incentives for investment is contrary to that of its predecessor Andrés Manuel López Obrador, who was reluctant to promote private companies.
Martínez-Cairo Gutiérrez said that the investment incentive policy is urgent because the previous government considerably increased public spending, which caused the fiscal deficit to skyrocket to 5.9 percent of the Gross Domestic Product (GDP) in 2024, the highest in 20 years. Therefore, the Sheinbaum government will have to cut public spending to reduce the deficit to 3.5 percent of GDP in 2025.
The reduction in spending will translate in part into less public investment, which reduces the dynamism of the economy and therefore consumption, thereby reducing the demand for steel.
In this scenario of lower demand for steel, part of the steel industry's production capacity will remain idle because in recent years, companies in the sector have invested $16.0 billion.
Data from the World Steel Association ranks Mexico as the fourteenth largest steel producer in the world and the tenth largest consumer in 2023.