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Mexico president vows to retaliate with own tariffs against Trump’s tax threat | Mexico
Mexico’s president Claudia Sheinbaum has rebuked Donald Trump’s threat to impose steep tariffs on Mexico, arguing the plan would do nothing to halt the flow of migrants or drugs bound for the US border, and vowing that Mexico would hit back with tariffs of its own.
“One tariff would be followed by another in response, and so on until we put at risk common businesses,” Sheinbaum said, warning that tariffs would cause inflation and job losses in both countries. “What sense is there?”
Sheinbaum’s comments came after Trump said on Monday that, as one of his first actions as president, he would impose a 25% tax on all imports from Mexico and Canada in an effort to stop the flow of migrants and narcotics into the United States.
“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Trump wrote on his Truth Social page.
It is unclear if president-elect Trump’s proposal would even be legal or possible, given that the three countries share a free trade agreement known as the USMCA that was negotiated during his previous term in the White House.
But as analysts pointed out, Trump has never been one to abide by the rules.
“Did we really think that Trump was going to become more institutional or more formal?” said Valeria Moy, a Mexican economist and director general of IMCO, a public policy analysis firm. “The Trump that the United States and the world will have, at least in the signs he’s given, is a Trump that will be more dictatorial, tougher, more emboldened.”
Even if they are legally questionable, the tariffs could provide Trump with a quick win upon taking office in January, said Viri Ríos, a Mexican public policy expert.
“I don’t rule out that he would implement them temporarily to give a result to his electoral base, which would be happy to see that Donald Trump is being consistent with his campaign promises,” she said. “But from that to this being a long term strategy, it seems to me that it would not be good for the United States itself.”
Mexico is the United States’s top trade partner as of September, representing 15.8% of total trade. According to Ríos, a 25% tariff on Mexican goods would cost the US economy $125bn over 10 years, while costing its GDP between 0.5 and 0.74%.
With such steep tariffs, US companies importing Mexican goods would undoubtedly have to raise their prices.
“The main victim will be the American consumer, because at the end of the day, tariffs are more or less reflected in prices,” said Moy.
That could end up costing Trump politically, given the role consumer prices played in his election win.
“One of the main reasons why Trump’s campaign was successful, was that people felt that inflation had increased during Biden’s last term,” said Ríos. “So I think he’s playing with fire.”
Analysts also questioned whether Trump’s plan would even have its desired impact, given that the flow of drugs to the US is driven by American demand, not by the flow of goods.
“It’s a bit like scapegoating,” said Ríos. “The key to this problem isn’t in Mexico, it’s in the United States.”
Ultimately, analysts viewed Trump’s proposal as a threat to force Mexico onto the negotiating table and implement policies on migration and security that could have some meaningful impact on the flow of drugs and migrants to the United States.
“We’ve already seen this [from Trump] – first you threaten, then you negotiate,” said Moy. “He’s using it as a threat to sit down and negotiate and say ‘Ok, you, president of Mexico … What are you going to do to contain the flow of migrants and what are you going to do in terms of security? What are you going to do to prevent fentanyl from passing from Mexico to the United States? And if you don’t do it, I’ll put tariffs on you.’”
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