Mexican President Claudia Scheinbaum speaks after reading a letter to U.S. President-elect Donald Trump warning that tariffs will lead to Inflation and unemployment in both countries.
President of Mexico | Reuters
Mexican President Claudia Scheinbaum said on Wednesday that Mexico would retaliate if the United States is elected president. Donald Trump He then implemented his proposed 25% across-the-board tariffs, a move the U.S. government warned could eliminate 400,000 U.S. jobs and drive up prices for U.S. consumers.
“If the United States imposes tariffs, Mexico will also increase tariffs,” Sheinbaum said at a news conference, her clearest statement yet as the country prepares for possible retaliatory trade measures against its largest trading partner. .
Mexican Economy Minister Marcelo Ebrard, speaking alongside Scheinbaum, called for greater regional cooperation and integration rather than a retaliatory import tax war.
“You’re shooting yourself in the foot,” Ebrard said. Trump’s proposed tariffswhich appears to violate the USMCA trade agreement between Mexico, Canada and the United States
Ebrard warned that the tariffs would hit U.S. companies by causing massive job losses, slowing economic growth and effectively doubling the taxes paid by U.S. companies producing in Mexico. “The impact on business is huge,” he said.
Ebrard added that the proposed tariffs would hit the automotive industry’s top cross-border exporters particularly hard, namely Ford, General Motors and star.
Ebrard noted that 88% of pickup trucks sold in the United States are manufactured in Mexico, and prices will rise. The vehicles are popular in rural areas that overwhelmingly voted for Trump. “We estimate the average price of these vehicles will increase by $3,000,” Ebrard said.
Scheinbaum and Trump had a phone call late Wednesday, and the two discussed topics at the top of Trump’s agenda.
Trump has said the tariffs will remain in effect until the flow of drugs, particularly fentanyl, and immigrants into the United States is controlled.
Trump posted on his “Truth Social” platform that Scheinbaum “agreed to prevent immigrants from entering the United States through Mexico, effectively closing our southern border.” He described the conversation as “very productive.”
Sheinbaum later responded on the
“Mexico’s position is not to close the borders, but to build bridges between the government and the people,” she added.
The Mexican peso rose nearly 1% against the U.S. dollar in after-hours trading on Wednesday, reversing losses from previous days.
Many analysts believe Trump’s tariff threats are more about negotiation tactics than trade policy.
David Cole, chief economist at Swiss bank Julius Baer, ​​said: “The lack of a clear link between this threat and trade-related issues suggests that the new president plans to use tariffs as a negotiating tactic to achieve goals that are largely unrelated to trade. “
Profits evaporate
Mexico’s automotive industry is the country’s most important manufacturing industry, exporting mainly to the United States. It accounts for nearly 25% of North American vehicle production.
Analysts at Barclays said they estimate the proposed tariffs “could effectively wipe out all profits” for Detroit’s Big Three automakers.
“While it is widely believed that a 25% tariff on any vehicle or product coming from Mexico or Canada could be disruptive, investors are underestimating how disruptive this could be,” they wrote in a note on Tuesday.
Brian Hughes, a spokesman for Trump’s transition team, said the tariffs would protect American manufacturers and workers from “unfair practices by foreign companies and foreign markets.”
Hughes said Trump will implement policies that will make his country more affordable and more prosperous.
GM and Stellantis declined to comment. Ford did not comment on how threatened tariffs would affect its business but said it builds more vehicles in the United States than most major automakers.
Mexican auto industry group AMIA said it would be prepared for any possibility and await any formal action.
The Institute of International Finance, a global trade group for the financial services industry, has warned that Mexico’s relationship with the United States will face challenges ahead.
“The imposition of tariffs, ultimately resulting in increased protectionism, and other policies affecting exchange rates and commodity prices could have significant consequences for the region,” it said in a report.
USMCA is up for review in 2026.
Katia Goya, international economics director at Grupo Financiero Banorte, said the three countries in the USMCA may seek a comprehensive renegotiation of the agreement rather than simply rubber-stamping it to continue as it currently stands. form.
Goya said: “The impact of the trade conflict will mean slower economic growth, higher unemployment and higher inflation in the United States.”
Ebrard said that in the first nine months of this year, USMCA trade volume reached US$1.78 trillion.
“We can divide and divide through tariffs,” Ebrard said. “Mexico does not want conflict and division, but a stronger region.”
