Mexico will retaliate if the US goes ahead with Trump's tariff plans, the president said
Mexican President Claudia Sheinbaum said Wednesday that Mexico will retaliate if US President-elect Donald Trump follows through on his proposed 25 percent tariff, a move her government warned could kill 400,000 American jobs and raise prices for American consumers.
“If there are US tariffs, Mexico will also raise prices,” said Sheinbaum in a press conference, in his clear statement however that the country is preparing retaliatory measures against its main trading partner.
Mexico's Economy Minister, Marcelo Ebrard, speaking to Sheinbaum, called for more regional cooperation and integration instead of a retaliatory war on foreign tariffs.
“It's a shot in the foot,” Ebrard said of Trump's proposed tariffs, which appear to violate the Canada-US-Mexico Trade Agreement (CUSMA).
Ebrard warned that the tariffs would lead to huge US job losses, slow growth, and hit US companies that manufacture in Mexico by doubling the taxes they paid.
“The impact on companies is huge.”
Bad payments in the car sector: the minister
The proposed tariffs will affect the auto sector that trades without borders the most, added Ebrard, namely Ford, General Motors and Stellantis.
Ebrard noted that 88 percent of trucks sold in the US are made in Mexico and will see a price increase. These cars are popular in the countryside that voted for Trump in large numbers.
“Our calculations say that the price of these cars will increase by $3,000 [US],” said Ebrard.
Sheinbaum and Trump spoke by phone later Wednesday, with both discussing top topics on his agenda.
He had said the tariffs would remain in effect until the flow of drugs – particularly fentanyl – and immigration into the US was controlled.
In a post on his Truth Social forum, Trump said Sheinbaum “agreed to stop immigration through Mexico, and into the United States, effectively closing our Southern Border.” He described the discussion as “very productive.”
Sheinbaum later responded to X that he had laid out Mexico's migration strategy, which “takes care” of migrants before they reach the US-Mexico border, in his phone call with Trump.
“The situation in Mexico is not to close borders, but to build bridges between governments and their people,” he said.
In after-hours trading on Wednesday, the Mexican peso strengthened nearly 1 percent against the dollar, reversing losses incurred in previous days.
Many analysts view Trump's tariff threats as a negotiating tactic rather than trade policy.
“The lack of a clear connection between these threats and trade-related questions suggests that the new president plans to use tariffs as a negotiating tactic to achieve goals that are not strictly related to trade,” said David Kohl, chief economist at Julius Baer.
An important sector of Mexico
Mexico's automotive industry is the country's most important manufacturing sector, with most exports to the United States. It represents about 25 percent of all vehicles produced in North America.
US President-elect Donald Trump is vowing to impose high tariffs on all goods entering the United States from Canada and Mexico. Andrew Chang breaks down why experts say the move will hurt Canada's economy and examines how likely Trump is to follow through on his threat.
Analysts at Barclays said they estimated the proposed tariffs would “wipe out all profits” from the Detroit Three car companies.
“While it is generally understood that a 25 percent tariff on any vehicles or content from Mexico or Canada would be disruptive, investors do not appreciate how disruptive this would be,” they wrote in a note on Tuesday.
Brian Hughes, a spokesman for Trump's transition team, said the tariffs would protect American manufacturers and workers from “unfair practices by foreign companies and foreign markets.”
Hughes said Trump will implement policies to make life more affordable and prosperous in his country.
GM and Stellantis declined to comment. Ford did not comment on how these threatened costs will affect their business, but they say they produce more cars in the United States than other major car manufacturers.
Mexico's auto industry group AMIA said it would prepare for any eventuality and wait to see what legal action is taken.
The Institute of International Finance, a trade group for the global financial services industry, has warned that Mexico-US relations will be challenging going forward.
“Taxation, ultimately leading to increased protectionism, and other policies affecting exchange rates and commodity prices may have a significant impact on the region,” the note said.
CUSMA will be reviewed in 2026.
Katia Goya, director of international economics at Grupo Financiero Banorte, said that it is possible that the three CUSMA countries will want to renegotiate the agreement rather than simply rubber stamp it to continue as it is now.
“The result of the trade conflict situation is that it will mean economic decline in the United States, increased unemployment and inflation,” said Goya.
Ebrard said that CUSMA trade reached $1.78 trillion US in the first nine months of this year.
“We can divide and conquer with a fee,” Ebrard said. “Mexico does not want conflicts and divisions, but to build a strong region.”
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