WASHINGTON — Economic pain tied to the auto industry and other key sectors is mounting south of the U.S. border, even as Mexican President Claudia Sheinbaum carefully navigates trade talks with the United States.

"I think she's caught between a rock and a hard place," said Tony Payan, a U.S.-Mexico scholar at Rice University in Houston. "Rhetorically, she's handling it as deftly as she can given the circumstances."

Sheinbaum has declined to retaliate against any U.S. moves and so far managed to avoid most tariffs. As of Tuesday, most Mexican goods that comply with the U.S.-Mexico-Canada free trade agreement can flow north without an import tax.

That outcome has earned her consistent approval ratings of about 80% — a level no recent U.S. president has come close to reaching — even as layoffs tied to tariffs begin and national growth projections fall. The brewing turmoil could test her approach and chip away at support, especially in manufacturing centers where the auto industry has driven growth for decades.

"Mexico is in a crunch. The economy is slowing down. I think it might already be in a recession, and domestic consumption is collapsing," Payan said in a phone interview.

He added: "The fiscal position of the Mexican government with a shrinking tax base, near-zero greenfield investment, and maquiladoras beginning to reduce their production is already causing economic trouble."

Private sector economic analysts polled by the country's central bank, on average, have predicted 0.5% growth for Mexico's economy in 2025, according to Reuters. That is a decline from previous estimates and markedly lower than the government prediction of growth between 1.5% and 2.3%.

Sheinbaum's 'Texas two-step'

Even as headwinds build, U.S.-Mexico experts said Sheinbaum has handled the political dynamics of the situation well by deploying a cool demeanor and conveying stable confidence. Payan described her strategy as a "Texas two-step."

"On the one hand, she placates Washington by simply sort of folding and complying, and not behaving aggressively," he said. "And on the other hand, for domestic public consumption, she employs a sovereignty discourse."

Sheinbaum, for example, pledged in February to send 10,000 Mexican National Guard troops to its border with the United States to clamp down on illegal drug trafficking. That promise helped her earn a delay on the imposition of 25% tariffs on goods from her country.

She has since sent her economy minister, Marcelo Ebrard, on frequent trips to Washington to meet privately with top Trump administration officials like Commerce Secretary Howard Lutnick.

Lutnick, speaking to reporters at the White House last week, commended Sheinbaum for being "restrained and pragmatic." Trump himself even complimented the Mexican president. "We've had many conversations," Trump said during an April 10 cabinet meeting. "She's a very elegant, just a fantastic person. And she's been very nice, very, very nice."

At home, meanwhile, Sheinbaum has used daily speeches to reassure the public.

"It's a relationship of respect," she told reporters in Spanish a day after Trump's cabinet meeting. "You can agree or disagree, but there always has to be a relationship of respect. And for Mexico, we've always asked for the same things: collaboration, respect and not subordination."

In response to a separate question about her popularity and praise from American actor Fran Drescher, who is president of the Screen Actors Guild union, the Mexican president deflected and celebrated her country instead.

"It is the people of Mexico who give us strength," she said in Spanish during a Friday press conference at Mexico's National Palace. "And we must always be proud of the people of Mexico. ... We are an extraordinary country."

Though the comment did not mention the United States or the economic challenges posed to her country by American tariffs on Mexican goods, Sheinbaum's statement typified the public image she has presented in navigating trade talks and boosting her domestic agenda.

Fear and layoffs for autos

Those trade talks, despite the praise Sheinbaum has gotten, have not been a complete success. A 25% tariff on imported vehicles from all countries remains in place, and similar rates for auto parts are scheduled to take effect May 3. Trump hinted Monday at potential relief on that front, but months of tariff signals from Washington have already impacted Mexico.

Ciudad Juárez alone lost 2,500 jobs in March, according to news reports citing Mexican federal data. More than 1,500 of those jobs were from maquiladoras — which are manufacturing centers owned by foreign companies, usually from the United States. The city has lost about 9,300 jobs over the past year.

Payan said he expects more layoffs in the auto parts production hub and pointed to already-announced cuts from automakers elsewhere in the country.

Stellantis NV, notably, moved to idle its Toluca assembly plant throughout April due to tariffs. The plant makes the Jeep Compass and electric Wagoneer S. In Puebla, Volkswagen AG laid off 156 workers in March, though the company said it was a cost-cutting measure unrelated to tariffs.

General Motors Co. and Ford Motor Co. have not signaled plans to shrink their production footprints in Mexico. GM, in a statement to The Detroit News, said there would be no immediate changes. Toyota Motor Corp. also said it had no immediate plans for changes.

Ford, which has emphasized its American brand identity in recent months, noted in an email that the company has only built one plant in Mexico since the 1980s, the Irapuato plant that opened in 2017 and produces powertrains for electric vehicles.

The Dearborn-based automaker has, however, continued to modernize its existing facilities. Its plant in Cuautitlán Izcalli, a city of more than 500,000 people near the national capital, has made more than 2 million vehicles since opening in 1964. The plant now produces the all-electric Mustang Mach-E.

"The history of our town, you could not tell it without Ford Motor Co.,” Cuautitlán Mayor Luis Daniel Serrano said in Spanish during a March international trade summit in Washington.

“And in the same way, you could not properly tell the history of Ford without the people of Cuautitlán Izcalli,” he said in an interview. “It’s the most productive plant Ford has."

The factory directly employs about 1,500 people and supports another 2,000 indirectly across the supply chain, according to his office.

Payan, recently back from a visit to Juárez, said he's already seeing signs from cafeterias near manufacturing plants that production pullbacks are coming. "When they start saying, 'I don't need as much beef, I don't need as many tortillas,' there is a definite slowdown and possibly layoffs," he said.

The Mexican Automotive Industry Association, the country's leading auto industry trade group, did not immediately provide a comment on recent developments related to tariffs.

What comes next

Given the potential slowdown for autos and other trade-reliant industries, Payan said it's unclear how long Sheinbaum will remain popular and stick with her current approach to U.S.-Mexico relations.

"How long will that last, given the economic crunch that is already speeding up?" Payan questioned. "Who knows?"

He suggested that the external threat posed by Trump has shifted attention from "bad" economic and regulatory decisions that have hurt Mexico's economy since Sheinbaum's predecessor, Andrés Manuel López Obrador, took office in 2018. But Payan also acknowledged that there is not much else she can do.

"The president has very little room for maneuver," he said. "She has no choice but to try to calm the markets and to calm investors as much as she can ... to stay put or even to invest more."

Diego Marroquín Bitar, a Washington-based expert on North American trade and U.S.-Mexico relations, agreed. "I think the private sector understands that if Mexico were to retaliate, the biggest loser from retaliation would be Mexican industries. And that's why they're giving her a chance to test this approach," he said.

A realistic goal for Mexican negotiators, he added, is to get the current 25% tariff rate on non-USMCA goods cut to 12.5% while businesses work to get more of their products compliant with the accord. About half of the country's exports to the United States are compliant, though Mexican officials have said they hope to raise that number closer to 85-90% within months.

Marroquín Bitar, who worked at the nonpartisan Wilson Center think tank until Trump shuttered it earlier in April, said negotiators might be able to achieve that reduction through pledges to block Chinese investments in Mexico. But an automotive tariff reduction, he suggested, is probably out of their hands.

"I think the administration sees them as a key pillar of their industrial policy," he said. "And in their view, it's the only way to ... bring back auto manufacturing to the country."

The scholar, mentioning the recent backtrack by Trump on tariffs for semiconductors and other tech products, predicted that the likeliest cause for import tax relief on the auto industry will be a market response that the Trump administration cannot ignore.

That may be what Sheinbaum and other Mexican officials and business leaders are waiting for.

"The auto sector between both countries is so integrated, it's going to be really costly for the U.S. to compete and to build just competitive cars without Mexican manufacturing and Mexican labor," he said. "I don't think they're completely pessimistic. I think they're waiting until that happens."

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