On November 28, Financial Associated Press reported (Editor: Bian Chun) that U.S. President-elect Trump stated on Monday that he would impose a 25% tariff on all products entering the USA from Mexico and Canada after taking office. In addition, Trump threatened to impose a 10% tariff on all goods imported from China.

Mexican President Claudia Sheinbaum stated on Wednesday that if Trump implements his proposed 25% comprehensive tariff, Mexico will retaliate. The Mexican government warned that this move could result in the loss of 0.4 million jobs in the USA and increase prices for American consumers.

"If the USA imposes tariffs, Mexico will also raise tariffs," Sheinbaum stated at a press conference. This was her clearest statement so far regarding Mexico's preparation to take retaliatory trade measures against its largest trading partner.

The day before, Sheinbaum hinted that Mexico would retaliate against any tariff increase, emphasizing that dialogue is the best way to solve problems. She noted that the issues raised by Trump, such as illegal immigration and drugs, cannot be resolved through tariffs, and that to address these problems, the USA needs to look at itself.

Mexican Economy Minister Marcelo Ebrard, speaking alongside Sheinbaum, called for strengthening regional cooperation and integration rather than launching a retaliatory tariff war.

"This is like shooting oneself in the foot," Ebrard stated regarding Trump's proposed tariffs, indicating that it seems to violate the USMCA trade agreement between Mexico, Canada, and the USA.

Ebrard warned that the tariffs would lead to significant unemployment in the USA, slow economic growth, and impact American companies manufacturing in Mexico, as the taxes these companies actually pay will double. "The impact on companies is huge," he said.

Ebrard added that the proposed tariffs would hit the largest cross-border exporters in the auto industry particularly hard, such as ford motor, general motors, and Stellantis.

Ebrard pointed out that 88% of the pickups sold in the usa are manufactured in mexico, and prices will rise. These vehicles are very popular in rural areas that heavily voted for Trump. "We estimate that the average price of these vehicles will increase by 3,000 dollars," Ebrard stated.

The mexican auto industry is the most important manufacturing sector in the country, primarily exporting to the usa, accounting for nearly 25% of total north american auto production.

Barclays analysts estimate that the proposed tariffs "could completely wipe out all profits of the big three auto manufacturers in Detroit."

"While it is widely believed that imposing a 25% tariff on any cars or parts from mexico or canada could have a devastating impact, investors underestimate the extent of that damage," a Barclays analyst wrote in a report on Tuesday.

Many analysts believe that Trump's tariff threats are more of a negotiation strategy rather than trade policy.

Katia Goya, head of international economics at Grupo Financiero Banorte in mexico, stated that the usa, mexico, and canada are likely to seek a complete renegotiation of the USMCA agreement. For the usa, the trade conflict situation would mean "slower economic growth, rising unemployment, and increasing inflation."

Editor/ping