Mexican President Claudia Sheinbaum said that on Sunday, March 9, she would announce tariffs and other measures in response to President of the United States Donald Trump’s decision to impose levies on Mexican goods.
The tightening of Mexico City’s trade policy towards Washington and in reverse is a worsening of the relationships between the two long-standing partners in the area of the economy. It is worth noting that experts have repeatedly warned that the implementation of Donald Trump’s tariff threat could provoke retaliatory measures of a similar nature.
At her news conference on Tuesday, March 4, Claudia Sheinbaum said that she would use Mexico City’s main square, the Zocalo, to convene supporters at noon and detail her plan. Against the background of this statement, the Mexican peso showed a drop of 1.5% against the US dollar.
Claudia Sheinbaum stated that Mexico’s goal is not to start an economic confrontation, which is contrary to what should be done. According to her, it is impossible not to think about the damage that the mentioned actions will cause to citizens of the United States and companies from this country. Also, in the relevant context, she noted that no one would benefit from this decision.
On Tuesday, Donald Trump delivered on his threat to hit Canada and Mexico with sweeping import levies of 25% and doubling the tariff on Chinese goods to 20%. It is worth noting that the response in this case turned out to be very rapid, although Mexico has not yet taken concrete action in this direction. Against this background, the global economy is gradually starting to sink into such a negative state of affairs as the trade war. Mutual measures mean that all parties to the confrontation will face certain negative consequences, which can mean both financial losses and a kind of downward impact on the processes in the production area. In the context of the relevant situation, the winner will be the state with the largest margin of safety.
Claudia Sheinbaum noted that Mexico has worked alongside the United States at the request of Donald Trump, including strengthening the southern border to curb migration, improving security to stop the inflows of fentanyl into the US, and holding trade talks. She once again called on Mexicans to keep a cool head. According to media reports, Claudia Sheinbaum, as part of her public rhetoric, seeks to demonstrate calmness against the background of the high probability that a crisis scenario will be implemented in the space of the Mexican economic system.
It is worth mentioning that just a couple of years ago, manufacturers were fighting for the opportunity to locate their production facilities in Monterrey, an industrial city in the northeastern part of Mexico. The corresponding desire was because in this case, the geography of the companies’ activities was approaching the United States and its extensive consumer market. Currently, the situation is different. According to media reports, real estate agents are preparing to offer flexible rental plans to gain business in Monterrey.
For a long period, Mexico has pursued a strategy that envisaged increasing exports and gaining foreign business as the main drivers of economic growth. It is worth noting that this approach began to show failures even before the victory of Donald Trump in the United States presidential election in November. Currently, Mexico City’s plan to strengthen cooperation with Washington, formulated as part of the mentioned strategy, is approaching the threat of a complete collapse.
Against the backdrop of the tariff confrontation, Mexico’s economy, which is the second largest in Latin America, is facing gloomy forecasts that effectively negate the chance to make the transition to a more favorable dynamic after years of sluggish growth. Data from the World Bank indicate that in the period from 1980 to 2022, the gross domestic product (GDP) of the mentioned country increased by an average of just over 2% per year. Amid a wave of nearshoring investments, Mexico recorded economic growth of more than 3% in 2022 and 2023. These indicators were interpreted by many investors as a sufficient reason to be confident that the country is entering a period of steady and more significant GDP indicators compared to previous readings. The corresponding prospects, which in the context of the trade war will gradually become memories of the past, filled with unfulfilled bright hopes, also provided that Mexico would be ahead of other Latin American countries in terms of economic growth. Moreover, the corresponding expectations envisaged that the mentioned leadership will be maintained for many years to come. A trade war means a more severe reality, in which economic growth is something that can be conditionally described as an impossible situation.
Claudia Sheinbaum took office in October. It is worth noting that even then, Mexico’s economic prospects were already deteriorating. GDP growth forecasts for 2025 have dropped to less than 1%. Investors expected budget cuts necessary to fix the increasing fiscal deficit.
As we have reported earlier, Canada Puts Tariffs on $107 Billion of US Products.
