Economic Developments and Trade Disruption
Mexico's currency extended a 10-day rally to reach its strongest level since February, supported by the Bank of Mexico's decision to hold its benchmark rate at 6.5% and a weaker U.S. dollar following soft American jobs data. However, Pemex reported a 70% annual drop in second-quarter net profit, attributed to higher financial costs, tax obligations and unfavorable exchange rates.
Regional economic disparities remained stark. Sinaloa posted the worst quarterly contraction of any Mexican state, a downturn economists linked to ongoing cartel violence. Tourism GDP fell 0.8% in the first quarter compared to the previous period, driven by a 5.9% drop in foreign visitor spending, though domestic tourism consumption rose 0.5%.
The avocado sector experienced dramatic swings. Mexico sold $3.65 billion worth of avocados to the United States in 2025, supplying approximately 80% of U.S. imports and generating around 200,000 jobs in Michoacán alone. First-quarter exports to the U.S. jumped 35% year-over-year, but the United States then suspended avocado export certifications from Michoacán, citing an unspecified threat against U.S. interests. This marks the third such suspension in just over four years. Previous incidents in February 2022 and June 2024 involved threats and assaults against U.S. agricultural inspectors, with the 2022 suspension following a threatening message to an inspector in Uruapan and the 2024 halt occurring after two USDA employees were assaulted and detained at a police roadblock. Michoacán's governor deployed additional state security personnel and the Defense Ministry sent more than 1,500 soldiers to the region in response to the latest suspension.
Energy Policy: Fracking Ban and Continued Studies
A government expert committee tasked with assessing sustainable fracking recommended prohibiting hydraulic fracturing in the Tampico-Misantla basin, Mexico's largest potential shale region, citing environmental, social and biodiversity concerns. Sheinbaum confirmed her government would respect that recommendation. However, the committee recommended continued evaluation of two northern basins, and pilot projects in Coahuila and Tamaulipas could begin as soon as next month if approved, as Mexico seeks to reduce reliance on natural gas imports from the United States.
Security: Cartel Leadership Transitions and Past Crimes
U.S. authorities raised the reward for CJNG's new leader, Juan Carlos Valencia González, to $25 million following the February death of cartel founder Nemesio Oseguera Cervantes, known as El Mencho. Oseguera Cervantes died on February 22, 2026, during a Mexican military operation in Tapalpa, Jalisco, conducted with U.S. intelligence support. He carried a $15 million U.S. bounty at the time of his death. His killing triggered widespread retaliation, with at least 25 National Guard members killed in violence that erupted across at least 20 Mexican states, as CJNG set vehicles ablaze and established roadblocks in major cities including Guadalajara. The reward increase is part of more than $100 million in total bounty offers and new visa restrictions targeting the organization.
Federal agents dismantled four illicit fuel processing centers in San Luis Potosí, Hidalgo and Morelos, seizing roughly 1 million liters of fuel. In Sinaloa, Sheinbaum acknowledged the murder of content creator César Gastélum, the ninth social media personality killed in the state since 2024.
In a case tied to one of Mexico's most notorious unsolved crimes, federal authorities arrested former Guerrero Governor Ángel Aguirre on charges of concealing video evidence related to the 2014 disappearance of 43 Ayotzinapa students. On September 26, 2014, the male students from the Ayotzinapa Rural Teachers' College disappeared in Iguala, Guerrero, after local police intercepted buses they had commandeered and handed them over to the Guerreros Unidos crime syndicate. Only three students' remains have been identified to date. The case was officially declared a crime of state, with government investigations confirming that local, state and federal officials played roles in the students' disappearance and subsequent cover-up, making it one of Mexico's largest human rights violations. Sheinbaum said the arrest was not politically motivated.
Diplomacy: Peru Relations Restored
Sheinbaum announced that Mexico and Peru would restore relations severed since November. The diplomatic rift began in December 2022 after former Peruvian President Pedro Castillo attempted to dissolve Congress and was subsequently arrested. Mexico granted asylum to Castillo's family members and associates, including former Prime Minister Betssy Chávez, which Peru viewed as interference in its internal affairs. Peru convicted Chávez as a co-perpetrator of conspiracy to commit rebellion for her alleged role in Castillo's attempt before granting her safe passage from asylum in Mexico's Lima embassy, clearing the path for diplomatic restoration.
Public Health and Environment
Sheinbaum laid the cornerstone for a new IMSS hospital in Oaxaca, part of a three-facility complex the government frames as a step toward its planned Universal Health Service. After the United Kingdom reported dozens of cyclosporiasis cases among travelers, Mexico stepped up health inspections at Riviera Maya hotels, though officials said the country has not been identified as the outbreak's source.
Officials at the National Autonomous University of Mexico (UNAM) confirmed that nearly 60,000 applicants must retake its entrance exam after widespread cheating undermined its first-ever online exam. UNESCO gave Mexico until February to show concrete action to protect the critically endangered vaquita porpoise. The vaquita population declined from approximately 567 individuals in 1997 to just eight by 2024, representing a 98% decline, before the most recent 2025 survey detected seven to ten individuals including new calves. Vaquitas die primarily from entanglement in gillnets set for totoaba fish, whose swim bladders are prized in the black market for traditional Chinese medicine, making vaquitas collateral victims of illegal fishing.
Governance and Additional Developments
Sheinbaum signed a decree aimed at strengthening federal government transparency, which officials said would compel departments to disclose more information following the 2024 elimination of the INAI watchdog agency.
Other notable developments included Estadio Azteca's owner reporting an estimated $47 million loss tied to World Cup costs despite FIFA's record tournament revenue. Embraer officially began operations at its first manufacturing plant in Mexico, located in Chihuahua's state capital. Taiwanese tech firm Inventec announced a $450 million expansion in Ciudad Juárez expected to create up to 6,000 jobs. UNAM is installing 58 new seismic monitoring stations to expand earthquake tracking across Mexico's historically under-instrumented northern states, and university chemistry researchers are experimenting with food waste to brew more nutritious beer. Tulum was named the world's happiest travel destination in a new analysis of over a million travel reviews.
