The labor market in Mexico is showing signs of strain as uncertainty surrounding U.S. tariffs continues to loom large, analysts report. Between January and March 2025, companies in sectors such as commerce, mining, transportation, and communications cut a staggering 26,000 formal jobs, marking the most severe job loss in four years, according to data from the Mexican Institute of Social Security (IMSS).
Axel Eduardo González, the data coordinator for the economic research organization México ¿cómo vamos?, attributes a portion of this decline to the uncertainty that has persisted since Donald Trump assumed the presidency of the United States, Mexico's primary trading partner. "Trump has had a very significant impact on investment and the suspension of projects, such as was the case with Stellantis," González noted.
Stellantis, the fifth-largest car manufacturer globally and the owner of brands like Chrysler, Jeep, and Dodge, announced in April 2025 that it would suspend production in some of its plants in Mexico and Canada due to the tariffs imposed. This decision underscores the far-reaching effects of trade policies on employment in the region.
BBVA analyst David Cervantes Arenillas elaborated on the situation, indicating that the slowdown in employment is closely linked to a negative perception of both the national and international economic landscapes by the business community. He pointed out that recent factors, particularly the uncertainty tied to U.S. tariffs on global trade and Mexican exports, along with internal factors like judicial reforms, have significantly deteriorated business expectations and led to a contraction in investment levels. This, in turn, directly affects the creation of formal jobs.
González also emphasized that the Mexican economy was losing momentum even before Trump took office. The latest records from the National Institute of Statistics and Geography (Inegi) reveal that the Gross Domestic Product (GDP) fell by 0.6% from October to December 2024, with analysts predicting a similar decline from January to March 2025, suggesting a technical recession.
The manufacturing sector, a key employer in Mexico, recorded only 64,000 new jobs during the first quarter of 2025, the worst performance for this period since 2020, when the Covid-19 pandemic began. Service sectors for businesses and households added nearly 14,000 jobs, which is half of what was created during the same period last year.
Overall, the national economy managed to create approximately 227,000 formal jobs from January to March 2025, marking the worst result for a first quarter in five years. Looking ahead, the Bank of Mexico (Banxico) conducted a survey last month among 42 economic analysis and consulting groups, which revealed a consensus forecasting the generation of 250,000 jobs insured in the IMSS for 2025. This projection indicates an expectation of losing nearly 2,000 jobs for the remainder of the year.
Institutions like Banamex project an average creation of only 156,000 jobs throughout 2025, the lowest forecast since 2020. Alberto Alesi, the general director of ManpowerGroup for Mexico, the Caribbean, and Central America, explained that the first quarter is typically a critical period for job creation, as it usually sees a surge in hiring opportunities. However, this year, the pace of hiring did not exceed that of 2024.
Mexico City experienced the most significant job losses between January and March 2025, with nearly 13,000 fewer positions, followed by Tabasco, which lost over 3,000 jobs, partly due to the completion of the Dos Bocas refinery project. González remarked that the recent economic performance sheds light on the potential decline in job generation in the coming months. "As long as this period of uncertainty persists, the labor market will continue to weaken," he predicted.
Furthermore, the entrepreneurial landscape is also facing challenges due to the economic downturn, reporting a decrease of 6,509 employers in the first quarter, marking the worst start to a year since 2000, when records began at the IMSS.
In response to the ongoing trade tensions, specialists have urged the governments of Mexico and Canada to enhance their bilateral relationship to effectively confront the trade war instigated by President Trump. This recommendation highlights the necessity for collaborative efforts in navigating the complexities of international trade.
In a related development, Mexico has plans to send water to the United States via the El Cuchillo dam located in Nuevo León. This move is intended to settle a debt with the U.S. and is also a response to the looming threat of tariffs from Trump. Luis Carlos Alatorre, a delegate from Conagua, stated, "I come as a spokesperson because I am being asked to find a way to lower water from the El Cuchillo dam to pass it on to the United States." However, Marco Antonio Garza, leader of the Irrigation District 026 of Tamaulipas, confirmed the plan but indicated that it was met with resistance from farmers who opposed the idea, stating, "We will not allow water to pass under any circumstances."
As the economic landscape in Mexico continues to evolve amid external pressures and internal challenges, the implications for job creation and economic stability remain a critical concern for analysts and policymakers alike. The interplay between U.S. tariffs, local economic conditions, and international relationships will be pivotal in shaping the future of Mexico's labor market.
