U.S. Chamber of Commerce Critiques Mexico’s Judicial Reforms and Tax Practices

In a comprehensive letter sent to the Office of the United States Trade Representative (USTR), the U.S. Chamber of Commerce (USCC) has voiced strong concerns regarding Mexico’s judicial reforms. They specifically take issue with the Internal Revenue Service of Mexico, known as SAT, pointing to what they describe as “aggressive and inconsistent” practices in tax enforcement.

This commentary was submitted in response to a USTR call for public feedback regarding the USMCA, ahead of the agreement’s 2026 review. The USCC’s correspondence includes a 39-page document that addresses a myriad of issues and suggests various recommendations.

Under a section titled “Factors Affecting North America’s Investment Environment,” the letter states that U.S. businesses are grappling with heightened uncertainty, which seriously impacts their long-term planning and investment capabilities.

They express specific worries about Mexico’s recent judicial changes that allow direct elections for judges, which the USCC claims jeopardizes the government’s responsibility to maintain a competent, independent, and impartial judiciary. This situation raises substantial concerns about investment protection.

In fact, the first judicial elections in Mexico, conducted on June 1, were mired in controversy, achieving only a 13% voter turnout. Critics have stated that this could lead to the selection of judges lacking the necessary experience and being politically loyal to the Morena party founded by ex-President Andrés Manuel López Obrador.

Every one of the nine Supreme Court justices elected during these elections is reportedly affiliated with the Morena party or perceived to support it.

The USCC also mentioned that American companies have become more vulnerable to problematic practices from the Mexican Tax Authority (SAT), which they argue lack transparency and fairness and deviate from Mexican law and international standards.

“Such actions create considerable instability and risks of unwarranted fines, which SAT uses to collect extra revenue,” the USCC stated. They further detailed that responses to tax inquiries come with unreasonable timelines, conflicting views on the same issues, and excessive documentary demands.

“SAT’s aggressive and inconsistent tax enforcement practices, featuring audits viewed as excessive, refusal of deductions for intercompany transactions, and retroactive fines, heighten costs and uncertainty for U.S. businesses,” they added.

According to the USCC, these practices significantly undermine compliance with international best practices and threaten the advantages gained from the USMCA, indicating a need for urgent measures to ensure transparent and fair taxation.

Furthermore, the letter asserts that the dismantling of independent regulatory bodies in Mexico has led to decreased transparency and oversight. Recent dissolutions include essential entities like the Federal Economic Competition Commission and the Energy Regulatory Commission.

The USCC also highlighted that extensive regulatory delays and bureaucratic hurdles are major obstacles for U.S. businesses trying to operate in Mexico and Canada. The Mexican government has expressed intentions to address these challenges as part of its ambitious Plan Mexico initiative.

Concerns were also raised about recent amendments to the Amparo Act that limit individuals’ ability to challenge arbitrary governmental decisions.

USCC Identifies Three Key Priorities for USMCA Review

On the first page of the document, the USCC noted that the USMCA has yielded significant advantages for American workers, farmers, and various sectors of the economy. They emphasized that over 13 million U.S. jobs are tied to trade with Canada and Mexico, asserting that the agreement has spurred economic growth by facilitating numerous high-wage job opportunities.

There is speculation regarding a potential shift to more bilateral trade agreements among the three North American countries, but this seems rather unlikely. Nonetheless, some negotiations pertaining to the USMCA review might take a bilateral approach.

Regarding their “Priority 1,” the USCC underscored the importance of maintaining the tripolar aspect of the USMCA, which they argue is crucial for businesses that thrive under consistent trade rules across North America. Inconsistencies raise compliance costs.

The chamber also pointed out that without meaningful enforcement, trade agreements become ineffective. They identified that Mexico presents significant compliance challenges that hinder trade and investment prospects for the U.S. and American enterprises.

“Mexico encounters notable compliance hurdles, especially concerning non-tariff barriers related to agriculture, digital trading, energy, financial services, intellectual property, regulatory practices, and trade facilitation,” they noted.

Recently, U.S. Trade Representative Jamison Greer indicated that Mexico hasn’t fully adhered to the USMCA terms, a situation further complicated by imposed tariffs from the Trump administration on imports from Mexico and Canada.

The Mexican government has recognized that U.S. partners have raised issues regarding compliance and has expressed a desire to resolve these matters ahead of the formal review.

President Claudia Sheinbaum has mentioned that discussions regarding 54 non-tariff trade barriers are progressing well.

As for “Priority 3,” the USCC stated that one of the notable benefits of the USMCA lies in its provision of clear and stable business guidelines.

The agreement has already established robust mechanisms aimed at maintaining duty-free trade, streamlining customs processes, complying with risk assessments, and promoting digital trading.

USCC Recommendations for Action

The USCC has suggested that the administration consider some moderate updates to specific provisions of the USMCA. Proposed actions include forming a tripartite “Digital Trade Commission” focusing on artificial intelligence and trusted technology, as well as restoring critical intellectual property protections to align Canada and Mexico more closely with U.S. standards.

While not advocating for changes to USMCA’s rules of origin, the USCC emphasized that any amendments should be implemented in a way that keeps the rules clear, feasible, minimizes disruption, and maintains competitiveness in North America.