Mexico | Low Probability of Lasting Tariffs

Summary

Although the U.S. has threatened to impose 25% tariffs on imports from Mexico, this measure seems unlikely due to the economic and political costs it would bring to the U.S. economy:

Key points

• Key points:
• Reduced U.S. Competitiveness. The deep integration of supply chains between both countries, especially in the automotive and manufacturing industries, means that tariffs would increase costs, reduce competitiveness, and impact U.S. employment.
• Inflationary Pressure and Interest. Rates A 25% tariff would make key products such as food and manufactured goods more expensive, driving inflation in the U.S. and forcing the Fed to maintain high interest rates, which would slow economic growth.
• Unintended Consequences for Migration and Cooperation. Slower economic growth in Mexico could increase migration to the U.S., a politically sensitive issue. Additionally, Mexico is a key partner in security and migration control, making a trade confrontation inconvenient.
• Risk of Mexican Trade Retaliation. If the U.S. were to impose tariffs, Mexico could respond with countermeasures targeting strategic sectors, such as agriculture, affecting key U.S. states in the political landscape.
• Conclusion: Despite the rhetoric, the economic interdependence between Mexico and the U.S. makes a prolonged trade war unlikely.

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