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Mexico will soon have its first female president (The Wall Street Journal, subscription), and the NAM hopes she will continue to work to strengthen the critical U.S.–Mexico trade relationship.

What’s going on: In last weekend’s presidential election, Claudia Sheinbaum, the former mayor of Mexico City and the candidate of the ruling Movement of National Regeneration party, known as Morena, “had 58.6% of the votes with 73% of the ballots counted, according to official results from Mexico’s election agency.”

• Mexico is America’s largest trading partner.

Why it’s important: The Sheinbaum administration, which takes office Oct. 1, will need to “deal with the review” of the U.S.–Mexico–Canada Agreement, due in 2026. “The USMCA has proven itself as a force for growth, broadening manufacturers’ access to North American markets, leveling the playing field and modernizing rules to promote fair competition, particularly in the 21st-century digital economy,” NAM President and CEO Jay Timmons said Monday.

While the trilateral trade agreement “is incredibly important to our national security and … our place in the world,” as Timmons told POLITICO in February, the deal is not without its challenges, which include:

• Mexico’s power-generation laws, which have long favored Mexican state-owned energy firms and resulted in higher bills for manufacturers using existing energy-supply contracts;
• Permitting delays in American projects in Mexico, which undercut U.S. firms and reduce energy supply to North American manufacturers and consumers; and
• Mexico’s expanded food-labeling mandates and bans on the sale of some U.S. foods and nonalcoholic drinks, which unfairly restrict U.S. exports.

Changes coming? On Monday, Sheinbaum’s Morena party and allied groups appeared headed for a two-thirds majority in Mexico’s Congress, which is “needed to make constitutional changes without opposition support. That could allow the passage of unfinished key projects of [outgoing President Andrés Manuel] López Obrador, who wanted to overhaul energy laws, the judiciary and the election agency but didn’t have the votes to get them through Congress.”

Pro-democracy stance: “We are democrats and out of conviction would never be an authoritarian or repressive government,” Sheinbaum told a crowd in Mexico City following her win, echoing pro-democracy statements made by Timmons, who last summer led the American business community delegation to Mexico ahead of the third USMCA “Free Trade Commission.”

• “We believe in democracy,” Timmons said during meetings with North American trade ministers in Cancun. “However imperfect, this system fosters free enterprise, competitiveness, individual liberty and equal opportunity. These values make manufacturing strong in our countries.”

Manufacturing’s role: Manufacturing is likely to take on a larger role in upcoming USMCA talks, economists say, because “Mexico holds an important position in terms of nearshoring and the role that China is playing in global trade.”

A critical partnership: The U.S.–Mexico relationship is a vital one, Timmons continued.

• “We look forward to working with the Sheinbaum administration to ensure continuity under the USMCA and address our shared challenges at the border.