Mexico and US Engage in Trade War
Mexican President Orders Retaliatory Tariffs
Mexican President Claudia Sheinbaum has ordered retaliatory tariffs in response to the US decision to slap 25% tariffs on all goods coming from Mexico. This move marks the beginning of a trade war between the two neighboring countries.
Background
The US is by far Mexico’s most important foreign market, and Mexico in 2023 overtook China as the top destination for US exports. Mexico has been preparing possible retaliatory tariffs on imports from the US, ranging from 5% to 20%, on pork, cheese, fresh produce, manufactured steel and aluminum, according to sources familiar with the matter. The auto industry would initially be exempt, they said.
Response from Mexico
In a lengthy post on X, Sheinbaum said her government sought dialogue rather than confrontation with its top trade partner to the north, but that Mexico had been forced to respond in kind. "I’ve instructed my economy minister to implement the plan B we’ve been working on, which includes tariff and non-tariff measures in defence of Mexico’s interests," Sheinbaum posted, without specifying what US goods her government will target.
Economic Impact
US exports to Mexico accounted for more than US$322 billion in 2023, Census Bureau data showed, while the US imported more than US$475 billion worth of Mexican products. Almost a third of Mexico’s gross domestic product depends directly on exports to the US, Grupo Financiero BASE’s economic analysis director, Gabriela Siller, said on X. "With a universal tariff of 25%, it is estimated that exports could fall by around 12%. With this, Mexico’s GDP could fall by 4% in 2025, if the tariff is maintained all year round," Siller said.
Rejection of Allegations
In her post, Sheinbaum also rejected as "slander" the White House’s allegation that drug cartels have an alliance with the Mexican government, a point Trump’s administration used to justify the tariffs. Trump said the tariffs against Mexico were due to the country’s failure to stop fentanyl, a deadly opioid, from getting into the US, as well as what he called uncontrolled migration. Sheinbaum touted her government’s record since she took office in October – seizing 20 million doses of fentanyl, in addition to detaining over 10,000 people tied to drug trafficking.
Conclusion
The trade war between Mexico and the US is a significant development that could have far-reaching consequences for both countries. The impact on Mexico’s economy is likely to be significant, with exports potentially falling by 12% and GDP declining by 4% in 2025. The situation highlights the importance of dialogue and cooperation in international trade relations.
FAQs
Q: What are the retaliatory tariffs imposed by Mexico?
A: Mexico has imposed retaliatory tariffs ranging from 5% to 20% on imports from the US, including pork, cheese, fresh produce, manufactured steel and aluminum.
Q: What is the estimated impact of the US tariffs on Mexico’s economy?
A: The US tariffs could lead to a 12% decline in exports and a 4% decline in GDP in 2025.
Q: What is the reason behind the US tariffs on Mexico?
A: The US tariffs were imposed due to Mexico’s failure to stop fentanyl from getting into the US and uncontrolled migration.
Q: Has Mexico rejected the US allegations?
A: Yes, Mexican President Claudia Sheinbaum has rejected the US allegations of an alliance between drug cartels and the Mexican government, calling them "slander".