Nieuws Published at 19 February 2021

How President Joe Biden could Boost Potential Opportunities for Mexican Industries

It is too early to be certain of what will happen between the United States and Mexico with Biden in office, with another influential factor upcoming mid-term elections in Mexico. If Bidens promises are executed as planned, there may be potential opportunities that could arise for certain sectors of Mexico, especially in terms of sustainability.

After a cloudy decision process of the election results in November of 2020, Joe Biden was eventually elected as the 46th president of the United States, preventing a second term of Donald J. Trump serving in the white house. Since his inauguration day on 20 January 2021, Joe Biden has made several public statements about his intentions for his first year in office.

Biden has been outspoken about his stance of modifying immigration laws to undocumented obtain citizenship, abolish ICE, improve international relations that were previously impaired under the Trump Administration, and take more actions towards sustainable initiatives such as promoting circular economy and carbon neutrality. It is without a doubt that the United States will be seeing drastic changes under the new administration of Biden, which may have an impact on a global scale, especially considering his willingness to cooperate with foreign markets and promote international trade.

Biden has been transparent about his concern for climate change and sustainability, seeing that he had signed the United States back onto the Paris Agreement shortly after his inauguration. He has put much more emphasis into incorporating sustainability and carbon neutrality into his upcoming policies and is open to collaborating in a global scale. How could these future policies have an influence on Mexico?

Firstly, Biden has expressed a push on the manufacturing and sales of electric vehicles in the United States in an effort to transition into carbon neutrality. One example of a plan already in mind is to replace government vehicle fleets and trucks to be completely electric-powered, which will inevitably lead to a higher demand of manufacturing electric vehicles and parts. This may be advantageous for the automotive sector in Mexico seeing that one third of automotive and electric parts are manufactured in Mexico.

As from 17 February 2021, it was reported by Mexico Business News that the automotive sector of Mexico has already seen a vast recovery of employment by 76.2% due to a reverse in suspension of manufacturing. Furthermore, the demand of auto parts is expected to raise by 50% in 2021. These optimistic forecasts along with the raising the demand of electric vehicle parts in the United States would result in lower unemployment rate. Hopefully, this could help gradually push Mexico out of its current economic recession since the automotive sector accounts for 3% of Mexico’s GDP and 1.8% of employment. Although, this will not be the case for the immediate future.

Another influence of Bidens climate action is the push for investing more into green energy in not only the United States, but in neighboring countries as well. The year 2020 certainly created challenges for Mexico’s energy sector with the unforeseen circumstances of the global pandemic. However, according to a publication by the IRENA (International Renewable Energy Agency), the large renewable energy sector of Mexico may be a great asset due to the current resource potential and attractiveness for large-scale investments. This would include the industries of wind, solar, natural gas, and geothermal energy. 

In the beginning of February of 2021, the INF (International Monetary Fund) reported that the GDP of Mexico is forecasted to grow by 4.3%, which is an improvement after the 8.5 % GDP decline that was influenced by the mass outbreak COVID-19 crisis in 2020. This increase will depend on various factors such as the distribution of vaccine distributions, the rise of domestic consumption, and the demand of manufacturing and export sectors. However, increasing employment by opportunities from the automotive sector and renewable energy sector could play a greater roll in contributing to raising the GDP of Mexico.

It is too soon to tell what the future will hold in terms of how exactly the Biden administration will positively impact Mexico’s economy and market. However, with the plans that Biden has announced so far, there is hope that there will be newfound opportunities for businesses in the automotive and renewable energy sector to thrive.

Source Material:

https://www.ensambleglobal.mx/fmi-estima-un-crecimiento-del-pib-de-mexico-de-4-3-de-la-mano-de-estados-unidos/

https://www.trade.gov/knowledge-product/mexico-renewable-energy

https://joebiden.com/americanleadership/

https://www.naturalgasintel.com/mexicos-midterm-elections-in-june-said-vital-for-energy-industry/

https://crsreports.congress.gov/product/pdf/IF/IF11308

https://mexicobusiness.news/finance/news/decisive-2021-mexican-energy-sector?tag=energy

https://mexicobusiness.news/automotive/news/mexican-automotive-industry-recovers-76-percent-lost-jobs?tag=article