What Would Trump Tariffs Mean For Key Trade Partner Mexico?

(@FahadShabbir)

What would Trump tariffs mean for key trade partner Mexico?

Mexico City, (APP - UrduPoint / Pakistan Point News - 23rd Jan, 2025) US President Donald Trump has threatened to slap a 25-percent tariff on Mexican goods on February 1, a move that analysts say would deal a heavy blow to Latin America's second-largest economy.

Mexican President Claudia Sheinbaum called for "a cool head" in response to Trump's trade and other policy announcements.

What would be the implications for Mexico if its biggest trading partner imposes tariffs?

- Would tariffs tip Mexico into recession? -

Mexico's economy is "arguably the most vulnerable" to US trade protectionism, according to London-based consultancy firm Capital Economics.

The electronics and vehicle sectors would be particularly exposed to tariffs because half of their demand comes from the United States, Capital Economics said.

The vehicle sector alone generates five percent of Mexico's national economic output, it noted.

The two sectors are also "the ones where US security concerns are high about Chinese tech entering the country."

According to Oxford Economics, another advisory firm, US tariffs and expected Mexican retaliation would weaken the Mexican peso, drive up inflation and "could push Mexico into a technical recession."

Tourism, however, could benefit if a weaker peso makes vacations in Mexico more attractive, analysts said.