Last week, North America started to see some encouraging economic news as a transition back to a disinflationary cycle seems to have initiated. Following more than two years of pandemic-related disruptions, supply chains appear to be moving toward normalcy, and some larger trends suggest that “deglobalization” will benefit many emerging countries, including one of the United States’ largest trading partners, Mexico.

After several months of mounting tension, the Joe Biden administration held productive meetings with China at the G-20 in Indonesia. Leaders convened at a moment of global uncertainty, with the war in Ukraine and concerns about persistent inflation, particularly in the European Union.

On Tuesday, Nov. 8, the U.S. midterm elections took place, proving to be the most expensive and confounding midterms in some time. What many thought would be a red wave turned out to be a referendum on Donald Trump, highlighting divisions within the Republican party and Democratic mobilization following the Supreme Court’s decision on Roe vs Wade.

In the midterms, Republicans narrowly gained control of the U.S. House of Representatives and Democrats held on to the majority in the Senate. The split in Congress will create roadblocks for both parties to pass substantive legislation in the next two years. The elections also have implications for foreign policy.

As we enter the final weeks of the 117th Congressional Session, concerns remain about the willingness of Congress to address pressing issues, such as the debt ceiling. There is also talk about immigration, in particular legislation impacting dreamers.

Last week, a federal judge blocked the use of Title 42, a policy that has been in place since March 2020, allowing for the rapid expulsion of migrants at the border. Title 42 will now end in late December, creating logistical challenges amid the high number of border crossings and highlighting the need for continued cooperation with Mexico.

Mexico will hold its presidential elections in 2024. In a controversial move, President Andrés Manuel López Obrador (AMLO) has proposed to overhaul Mexico’s autonomous electoral agency, the National Electoral Institute (INE). On Sunday, Nov. 12, Mexico City and other cities across the country saw tens of thousands of people take to the streets to protest the reform, which critics say would threaten the country’s democracy. Opposition parties recently came out against the proposal, making it unlikely to be approved by Congress in the coming weeks.

In the commercial realm, U.S. Trade Representative Katherine Tai met earlier this month with Mexico’s new economy minister, Raquel Buenrostro. The two officials discussed Mexico’s energy sector and U.S. corn exports.

The United States and Canada requested settlement talks in July regarding López Obrador’s initiatives on energy, claiming that they violate the United States-Mexico-Canada Agreement (USMCA) by favoring state-owned companies. Yet, it is unclear if much will come from the consultations, which have already been extended beyond the initial 75-day period. Mexico seems reluctant to negotiate these matters, suggesting we’re in for a long haul on this topic.

In what may prove to be a particularly challenging political issue, Mexico appears to be moving forward with a decree to ban imports of genetically modified corn by 2024. The United States is the top corn exporter to Mexico, with the vast majority of the corn genetically modified. A Wall Street Journal op-ed cautioned that such a move could begin a trade war, and Iowa Senators are already pushing for new USMCA consultations on the ban. A recent industry report forecasts that, over a 10-year period, the ban would cost the U.S. economy $73.89 billion in economic output and over 32,000 jobs annually.

Mexico’s economy continues to recover following the downturn brought on by the covid-19 pandemic and related restrictions, with economic activity nearly returning to pre-pandemic levels. Last week, Fitch affirmed Mexico at a BBB rating, with a stable economic outlook, forecasting that the country’s GDP will grow by 2.5 percent in 2022 and 1.4 percent in 2023. And nearshoring continues to offer great potential to Mexico, if properly capitalized upon.

Later this week, Mexico is due to host a Pacific Alliance Summit, with South American countries such as Colombia and Chile in attendance, to discuss regional integration and new trade agreements. Notwithstanding, on Monday, Nov. 11, López Obrador threatened to cancel that summit after Peru’s Congress refused to allow President Pedro Castillo to travel to Mexico.

Many eyes are also looking toward the upcoming so-called “Three Amigos Summit,” which will be hosted by Mexico for the first time in nearly a decade. While the date has not yet been announced, the three North American governments are expected to meet to discuss immigration, security, trade and more.

In Brazil, former President Luiz Inacio Lula da Silva narrowly won the presidential elections, ousting Jair Bolsonaro. In the face of rising divisions, experts have cited concerns about increasing governability challenges in Brazil and across Latin America, as the region undergoes a second pink wave of leftist governments.