In an unmistakable warning to the U.S., Mexican President Claudia Sheinbaum warned Wednesday that Mexico would not hold back if U.S. President-elect Donald Trump made good on his threat of a 25% tariff on Mexican products. She says the tariff will hurt both economies lead to the loss of 400,000 American jobs and raise prices for consumers in the United States.
At a news conference to address the issue, Sheinbaum said that Mexico would retaliate with tariffs, emphasizing how such a move would harm the U.S. economy. She was accompanied by Mexico’s Economy Minister Marcelo Ebrard, who advocated regional cooperation instead of trade wars. Ebrard said the tariffs would contradict the USMCA agreement to foster free trade between the three countries.
Ebrard continued to describe the negative consequences that would come, particularly for U.S. carmakers operating in Mexico, like Ford, General Motors, and Stellantis. He explained that 88% of pickup trucks sold in the United States are built in Mexico and that a tariff of 25% could raise the cost of those trucks by $3,000. These kinds of trucks are extremely popular in rural areas of the United States that helped carry Trump to victory in 2020.
Later that day, following Trump’s proposal to keep the tariffs in place until the stream of drugs and migrants flowing into the United States were controlled, Sheinbaum said she had a phone conversation with Trump. According to her, Trump said that Sheinbaum agreed to help stop the migration through Mexico, though then she clarified: “That Mexico’s policy is not the closing of borders but one of co-responsibility.
To economists, though, the tariff threat was just a negotiating tool, and David Kohl, chief economist at Julius Baer, believes it may be part of Trump’s ploy to achieve something quite different from this trade issue. Despite tensions, Mexico’s peso rose against the U.S. dollar, reflecting investor bets on the country’s economic resilience.
As both countries prepare for any potential fallout, analysts predict that the USMCA agreement may be up for renegotiation by 2026, which would reshape the trade dynamics between the U.S., Mexico, and Canada.
