Mexico has issued a sharp response to President-elect Donald Trump’s proposal to impose a 25% tariff on all imports from Mexico. Officials have warned the measure, described as “catastrophic,” could cost 400,000 jobs in the United States and significantly raise prices for American consumers. Mexican authorities reminded Trump that tariff tools can be wielded by both sides.
Speaking at a press conference on Wednesday, Mexican President Claudia Sheinbaum stated, “If tariffs are imposed by the United States, Mexico will also increase its own tariffs.” Her remarks signal a clear threat of economic retaliation against Mexico’s largest trading partner.
Marcelo Ebrard, Mexico’s Minister of the Economy, called the proposal self-destructive, arguing it would disrupt regional supply chains and violate the U.S.-Mexico-Canada Agreement (USMCA). “It’s a shot in the foot,” he said.
Ebrard underscored the potential fallout for U.S. companies with operations in Mexico, particularly in the automotive sector. Automakers such as Ford, General Motors, and Stellantis would face higher production costs. He estimated that 88% of pickup trucks sold in the U.S., which are manufactured in Mexico, would see price increases averaging $3,000, hitting rural areas—key to Trump’s voter base—especially hard.
On Wednesday, Sheinbaum and Trump held a phone conversation. On the X platform (formerly Twitter), Sheinbaum described the exchange as “excellent,” highlighting discussions on strengthening security cooperation. Trump, however, claimed on Truth Social that Sheinbaum had agreed to halt migration through Mexico to the U.S.—a claim unverified by the Mexican presidency.
Trump has defended the proposed tariffs as a response to drug trafficking, particularly fentanyl, and uncontrolled migration. Sheinbaum countered that migrant caravans reaching the U.S. border had declined significantly due to Mexico’s efforts to manage the issue.
Analysts believe the tariff threats are more about negotiation than economic policy. “The lack of a clear link between this threat and trade issues suggests the president-elect plans to use tariffs as leverage to achieve non-trade objectives,” David Kohl, chief economist at Julius Baer, told Reuters.
Still, the economic stakes are high. The automotive industry, which drives Mexico’s manufacturing sector, represents nearly 25% of vehicle production in North America. Barclays estimates the proposed tariffs could erase profits for Detroit’s major automakers.
The USMCA, governing trade among the three countries, is set for review in 2026. Katia Goya, Director of International Economics at Grupo Financiero Banorte, predicts the negotiations could lead to a complete overhaul rather than a straightforward renewal. “Trade conflicts will reduce economic growth, increase unemployment, and fuel inflation in the United States,” she warned.
Ebrard noted that trade under the USMCA reached $1.78 trillion in the first nine months of 2024. “We can fragment and divide with tariffs, but Mexico prefers to build a stronger, united region,” he said.
The escalating tensions underscore the fragility of economic relations under Trump’s leadership. The Institute of International Finance cautioned that these disputes could amplify protectionism, disrupt exchange rates, and affect commodity prices across the region.
While Washington weighs its next move, Mexico is preparing to defend its interests while promoting regional cooperation. “Mexico does not seek conflict, but it is ready to defend its interests,” Ebrard concluded.
The standoff between Trump and Mexico could have far-reaching implications for both economies, with the future of North American trade relations hanging in the balance.
(This report is based on information from Sarah Morland, Raul Cortes, and Brendan O’Boyle for Reuters.)