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Mexico to Raise Tariffs on Autos from China in Major Trade Overhaul Published: 11 September 2025

  • Mexico announced on Wednesday that it will raise tariffs on automobiles from China and several other Asian countries to 50%, as part of a broader revision of import duties aimed at protecting domestic industries.
  • According to the Economy Ministry, the new tariff measures will affect approximately $52 Bn of imports across multiple sectors, including textiles, steel, and automotive. Import duties on Chinese cars, which currently stand at 20%, will be increased to the maximum level permitted under World Trade Organisation (WTO) rules.
  • Economy Minister Marcelo Ebrard said the measures were designed to support local employment, noting that Chinese vehicles were entering the domestic market below reference prices. The government expects the tariffs to protect an estimated 325,000 industrial and manufacturing jobs at risk.
  • The policy, which still requires congressional approval, will apply to countries without free trade agreements with Mexico. This includes China, South Korea, India, Indonesia, Russia, Thailand, and Turkey.
  • Beyond automobiles, the measures include a 35% tariff on steel, toys, and motorcycles, while textiles will see tariffs ranging between 10% and 50%. In total, the new duties are projected to affect 8.6% of Mexico’s total imports.
  • The tariff plan is also expected to raise an additional $3.76 Bn in revenue next year, according to government estimates.
  • Analysts noted that the decision comes amid growing trade tensions between the U.S. and China, with Mexico navigating its position as a key U.S. trade partner. Mexico has nearly doubled its trade deficit with China over the past decade, reaching $120 Bn in 2023. Some analysts suggested that aligning import policies with U.S. interests could reduce potential trade frictions, given the upcoming review of the U.S.-Mexico-Canada Agreement (USMCA) scheduled for next year.

(Source: Reuters)

Panama to weigh First Quantum copper mine restart by early 2026. Published: 11 September 2025

  • Panama may open talks early next year with First Quantum Minerals on the possible restart of its shuttered Cobre Panamá copper mine.
  • Commerce Minister Julio Moltó told local newspaper El Capital Financiero that the government will begin talks with First Quantum once an environmental audit is completed in three to four months. The audit is due to start within weeks, Moltó said. The review, conducted by SGS Panama Control Services, is to assess environmental, social and economic impacts, including employment opportunities for Panamanians.
  • The mine has been closed since November 2023 after Panama’s Supreme Court declared its operating contract illegal. President José Raúl Mulino has identified the reopening of Cobre Panamá as a top priority for his administration, following reforms to the country’s social security fund pension system. However, Mulino has said the audit must come first before any decision on reopening.
  • Before its closure, Cobre Panamá ranked among the world’s largest copper producers, yielding 350,000 tonnes in 2022, its final full year of operations. The mine contributed about 5% of Panama’s GDP, and First Quantum estimates the suspension has cost the country up to $1.7Bn in lost economic activity.
  • Minera Panamá, First Quantum’s subsidiary, and other companies tied to the project have suspended international arbitration proceedings against the government, clearing the way for talks. Locals around the mine rallied the government in June to reopen operations.
  • First Quantum has maintained the facility to ensure it can resume operations if an agreement is reached.

(Source: The Northern Miner)

EM Portfolios Funnel near US$45Bn in August, but Cracks are Showing, IIF says Published: 11 September 2025

  • Investors ploughed nearly US$45Bn into their emerging market (EM) equities and debt portfolios in August, the most in nearly a year, but a large outflow from EM stocks outside of China pointed to a change of sentiment among investors, according to a report from a banking trade group.
  • The US$44.8Bn net inflow for last month compares with $38.1Bn in July, which was sharply revised lower from US$55.5Bn, and compares favourably with US$28.2Bn in August 2024, according to data from the Institute of International Finance (IIF).
  • Chinese debt and stocks took in over US$39Bn net last month, while ex-China debt attracted US$13.2Bn. Stocks outside of China saw a US$7.4Bn outflow after three months of inflows. The shift "marks the weakest month for EM equity flows since the (Northern) spring and reflects a significant reversal in sentiment toward ex-China markets," Jonathan Fortun, senior economist at the IIF, wrote in a statement published alongside the data.
  • Yet an external tailwind could give EM assets support, as cooler-than-expected U.S. inflation data cemented expectations that the Federal Reserve will cut borrowing costs following its meeting next week. Lower rates in developed economies help funnel investments into EMs that offer higher yields.
  • Asia attracted US$18.1Bn, while Latin America added US$8.9Bn, partly boosted by debt flows to Mexico and Brazil, according to the report. EM Europe added US$8.7Bn, and the Middle East and North Africa US$5.8Bn more, the IIF data showed.
  • "All (regions) posted higher inflows than the previous month, yet the underlying pattern still reflects the outsized role of China in portfolio allocations," Fortun wrote. August marked the largest inflow to Chinese equities since February. “Investor positioning appears increasingly sensitive to headline risk and policy noise, especially in economies exposed to external shocks or electoral cycles,”.

(Source: Reuters)

U.S. Wholesale Inventories Revised Lower in July Published: 11 September 2025

  • S. wholesale inventories increased slightly less than initially thought in July, suggesting businesses were not rushing to rebuild inventory after stocks were depleted in the second quarter.
  • Wholesale inventory edged up 0.1%, after rising by an upwardly revised 0.2% in June, the Commerce Department's Census Bureau said on Wednesday, September 10, 2025. Economists had expected wholesale inventories to rise by 0.2%, unchanged from the flash estimate, compared to the 0.1% uptick originally reported for the previous month.
  • Inventories, a key part of gross domestic product, gained 0.2% in June and further advanced 1.3% on a year-over-year basis in July. Wholesale stocks of motor vehicles dropped 1.6%, but stocks of apparel surged 1.9%, while those of prescription medication increased 1.8%. Grocery inventories increased 2.0%.
  • Inventories decreased at a US$32.9Bn annualised rate in the second quarter, subtracting 3.29 percentage points (pps) from GDP. That was, however, more than offset by a record 4.95pp contribution from a smaller trade deficit.
  • Sales at wholesalers jumped 1.4% in July after rising 0.7% in June. With sales increasing by much more than inventories, the inventories/sales ratio for merchant wholesalers edged down to 1.28 in July from 1.29 in June. This implies that it would take wholesalers 1.28 months to clear shelves, down from 1.29 months.

(Sources: Reuters & NASDAQ)

 

Jamaica’s Policy Reforms Bolster Stability, Growth Hinges on Productivity and Infrastructure Execution Published: 10 September 2025

  • In its latest Country Risk Report, Fitch Solutions pointed out that Jamaica’s updated economic policy framework aims to foster a strong, inclusive environment by investing in education, implementing prudent economic policies, reducing crime, and promoting environmental sustainability and resilience.
  • Fitch sees the potential for further improvement in Jamaica’s enabling environment over the near and medium term, driven by sustainable macroeconomic policy frameworks, microeconomic policy enhancements, and continued investment in security.
  • In recent years, the government has made significant progress in improving macroeconomic policies and strengthening institutions, helping to reduce public debt, stabilise inflation and inflation expectations, and bolster Jamaica’s external position.
  • These policies are expected to continue, supported by robust policy and institutional frameworks and a political consensus that prioritises continued fiscal and monetary stability and sustainability. Specifically, Fitch pointed to strengthened monetary and financial frameworks, through inflation targeting, de-dollarisation, and enhanced banking regulation, that are reinforcing long-term macroeconomic stability and should support investment and growth.
  • However, while a high debt burden has historically been a major obstacle to growth in Jamaica, that debt reduction alone will be insufficient to accelerate growth. Low productivity, the high economic cost of crime, skills gaps, elevated energy costs, infrastructure weaknesses and exposure to global economic shocks and natural disasters will continue to weigh on growth and dynamism.
  • To address these challenges, the Jamaican government has outlined an economic development strategy that seeks to leverage its improved macroeconomic stance to drive progress in other areas critical to long-term growth.
  • Modern infrastructure development is at the heart of Jamaica’s 2025/2026 economic agenda. It focuses on transportation, water, healthcare, energy, broadband access, and special economic zones (SEZs). The government also aims to attract investment in oil and gas, diversify energy sources, and grow the global services sector through improvements in infrastructure, workforce skills, digital transformation, and regulatory reforms.
  • However, despite Jamaica's stated goal of investing in infrastructure development, lingering budget execution issues may constrain the government's ability to fully implement its ambitious policy agenda.

(Sources: Fitch Solutions)

Remittance Increase in June 2025 Published: 10 September 2025

  • Net Remittance Inflows to Jamaica increased year-over-year in June 2025, by 2.8% to US$267.5Mn according to data sourced from the Bank of Jamaica’s (BOJ’s) remittance bulletin. The increase was primarily due to a US$8.2Mn (2.9%) increase in total remittance inflows. However, this was marginally offset by a 5.4% rise in remittance outflows.
  • The increase in total remittance inflows was attributed to higher flows via the Remittance Companies channel and partly offset by a decline via the Other Remittances channel.
  • Amid the June 2025 increase, the U.S. remains the largest source market for remittance flows to Jamaica. The U.S. accounted for 68.2% of total flows, down from the 68.5% recorded for June 2024. The United Kingdom (11.4%), Canada (9.9%) and the Cayman Islands (6.2%) were also notable sources.
  • Looking ahead, the Trump administration's policy changes for trade and immigration pose risks to remittance inflows to Jamaica. Recently, the administration announced a 1.0% excise tax on cash-based remittances. However, local remittance firms expect little fallout as strong digital adoption by consumers and years of investment in alternative remittance channels could act as key buffers.

 (Sources: BOJ & NCBCM Research)

Mexico Sees Budget Deficit Lower In 2026 As Growth Ticks Up, Despite Uncertainty Published: 10 September 2025

  • Mexico expects its budget deficit to fall slightly in 2026 to 4.10%, as GDP growth is projected to increase, the finance ministry said during the government's budget presentation.
  • The deficit is expected to close 2025 at 4.32%, while the government maintains a pledge to support social programs and provide financial backing for state-owned oil company Pemex, which carries a significant debt load.
  • Finance Minister Edgar Amador said, "Although the international environment still presents risks stemming from uncertainty and trade tensions, it also opens up opportunities that we must seize." The government forecasts Latin America’s second-largest economy to expand between 1.8% and 2.8%, an increase of 1.3 percentage points on both ends of the range. This projection is higher than both the IMF’s growth forecast of 1.4% in 2026 and the Bank of Mexico’s most recent forecast of 1.1%.
  • The ministry also placed its inflation forecast for the end of 2026 at 3.0%, in line with the Bank of Mexico’s target, which is expected to be reached by the third quarter of next year. Along with a slowdown in inflation, the ministry anticipates a more accommodative monetary policy stance. The Bank of Mexico's benchmark interest rate is projected to close at 7.25% in 2025, 75 basis points lower than previously expected, and to decline further to 6% by 2026. Last month, the rate was lowered by 25 basis points to 7.75%, its lowest in three years.
  • In terms of state-owned enterprises, Pemex is projected to receive 263.5Bn Mexican pesos (US$14.14Bn) in 2026 to help meet debt and loan payments.
  • The budget proposal also indicated that Mexico’s General Import Tax will be reviewed in 2026 to support national development, including potential tariffs on countries such as China that do not have a trade agreement with Mexico. In addition, the draft budget announced new excise taxes aimed at discouraging consumption of certain products, like soft drinks, video games, and nicotine pouches.

 (Source: Reuters)

Brazil Coffee Exports To The US Fall In August Published: 10 September 2025

  • Brazilian coffee exports to the United States fell 46% in August, while shipments to Latin American neighbours increased, according to coffee exporters group Cecafe. Cecafe President Marcio Ferreira.
  • Brazil is the world's largest producer and exporter of coffee, while the United States is the largest consumer. U.S. imports of Brazilian coffee fell to 301,099 bags in August, down from 562,723 in the same month last year, following the imposition of a 50% tariff on most Brazilian goods, including coffee.
  • The tariffs have also affected Brazil’s instant coffee industry. According to ABICS, Brazil’s instant coffee exports to the U.S. in August fell 59.9% to 24,460 60-kilogram bags, compared to 65,914 bags in the same month last year.
  • Despite a decline in total exports to Germany, the country remained the largest importer of Brazilian coffee, receiving 414,109 60-kilogram bags in August. Meanwhile, exports to Mexico and Colombia rose 90% and 578%, reaching 251,166 and 112,948 bags, respectively.
  • Brazil's national crop agency Conab, and the International Coffee Organisation have warned that the tariffs could push coffee prices higher. As a result, Brazil, which incidentally is also the world’s second-largest coffee consumer, may experience increased domestic prices, potentially affecting inflation.

Canada’s Real GDP Forecast Remains Unchanged Despite Q2 Contraction Published: 10 September 2025

  • While second quarter (Q2 2025) Gross Domestic Product (GDP) data were weaker than expected, Fitch Solutions has maintained its growth forecast for 2025 at 1.4%, with the Q2 data not moving the needle on its outlook. Additionally, the weak Q2 growth figure is expected to have little impact on the Bank of Canada’s (BoC) interest rate calculus, given the strength of the economy. This leaves Fitch’s expectation that the BoC will lower the policy rate by 50bps by year-end 2025 intact.
  • Canada’s real GDP contracted 0.4% quarter over quarter (QoQ) in Q2 2025 for a drop of 1.6% on an annualised basis, falling more than the consensus expectation of a 0.7% contraction. The lacklustre Q2 real GDP print was driven by deteriorating trade dynamics, with exports falling significantly (-7.5%), driven by contractions in both goods (-9.2%) and services (-1.4%) exports. Additionally, business investment fell for a second straight quarter, contracting by 0.6% on the back of heightened business and trade uncertainty, with a notable drop in machinery and equipment investment, which fell 9.4%.
  • However, the downbeat headline growth figure masks a more resilient domestic economy. Final domestic demand grew by 0.9% in Q2, recovering from a weak -0.2% in Q1 and driven primarily by strong household consumption growth. Additionally, residential investment grew by 1.5% in Q2, up from -3.2% in Q1, contributing 0.12pp to the headline growth rate and offsetting the weakness seen in business investment that subtracted 0.11pp from the Q2 figure.
  • Looking ahead, while a trade deal with the United States (U.S.) remains elusive, uncertainty in the trade relationship will continue to ebb, with Canada removing many of its reciprocal tariffs on U.S. goods and existing U.S. tariffs on Canadian goods only applying to a small subset of non-USMCA-compliant goods.
  • Finally, with Fitch expecting both looser fiscal and monetary policy through the end of the year, the agency remains relatively upbeat that the Q2 contraction will be followed by steady, albeit uninspiring, growth. Of note, advance estimates of July’s growth figure show a 0.1% increase, with wholesale trade, real estate, and mining showing signs of strength, underpinning Fitch’s expectation of modest, but positive, growth in the second half of 2025 (H2 2025).

(Source: BMI, a Fitch Solutions Company)

Trump EPA seeks to Speed Up Permitting for AI Infrastructure Published: 10 September 2025

  • The Environmental Protection Agency (EPA) on Tuesday, September 9, 2025, proposed new measures aimed at speeding the construction of infrastructure needed for the rapid buildup of data centres for artificial intelligence that would enable companies to start building before obtaining air permits.
  • The proposal comes six months after the EPA announced an initiative called Powering the Great American Comeback that prioritised the agency's focus on rapidly building power generation to meet soaring demand from data centres. “For years, Clean Air Act permitting has been an obstacle to innovation and growth,” EPA Administrator Lee Zeldin said. “We are continuing to fix this broken system."
  • The EPA proposal will redefine the pre-construction requirements for power plants, manufacturing facilities and other infrastructure to enable companies to start some construction that is not related to air emissions prior to obtaining Clean Air Act construction permits.
  • The Trump administration has been focused on winning the race to rapidly develop and scale up the use of AI across the United States (U.S.) and has already launched a package of executive actions aimed at boosting energy supply to power its expansion.
  • Top economic rivals, the United States and China, are locked in a technological arms race to secure an economic and military edge. The huge amount of data processing behind AI requires a rapid increase in power supplies that are straining utilities and grids in many states. The Clean Air Act's New Source Review program will not allow construction of major facilities before they obtain air permits.
  • Under the Trump administration, the EPA has launched what it calls the largest deregulatory actions in the agency's decades-long history, including a move to repeal the scientific and legal underpinning for regulating greenhouse gas emissions that most scientists and environmentalists agree is driving climate change.

(Source: Reuters)