Mexicocity

Mexico could meet Trump’s proposed tariffs with measures of its own, the Mexican economy minister has warned, though he remains upbeat over any future trade negotiations.

Mexican secretary of economy Marcelo Ebrard told Radio Fórmula that, while he is “optimistic” that he can work with Trump, Mexico City might be forced to respond to any major tariff hike with its own tariffs.

“Because if you apply 25% tariffs against me, I have to react with tariffs, and I am your principle importer along with Canada”, he said in the interview with host Joaquín López-Dóriga.

“Then, if you impose tariffs, we’re going to have to impose tariffs and what does that give us? It’s a giant cost for the North American economy.”

‘Best deals’

Ebrard, who also served as foreign minister under the previous administration, said that he would tell Trump during negotiations that the US-Mexico-Canada Agreement (USMCA) was one of the “best deals that the US had done in its history”.

“If you look at the data that has been published about the automotive industry, it has grown Mexican exports by more than [$30bn] dollars a year,” said the economy minister, adding that the integration of the North American economy also “raised” the US economy.

According to the Office of the US Trade Representative, the value of US-Mexican trade totalled US$855.1bn in 2022. US exports to Mexico tallied up to $324.3bn, up 17.0% ($47.2bn) from 2021 and up 50% from 2012.

Campaign promises

During the campaign, Trump had threatened to hit Mexico with additional tariffs if it did not work to reduce the flow of drugs and migrants through the US-Mexico border. The president-elect has often made migration and border security an important part of his policy agenda.

He also called tariffs “the most beautiful word in the dictionary”, promising a 20% global tariff on all imports into the US while imposing rates as high as 60% on China’s goods.

In July, outgoing US president Joe Biden used national security powers to raise tariffs on Chinese steel and aluminium goods imported into North America via Mexico, amidst worldwide complaints over ‘dumping’ of such goods by China.

Political background

Mexico, one of three countries that form USMCA, has recently elected its own president, former Mexico City mayor Claudia Sheinbaum.

Sheinbaum, the first female president in Mexico’s history, was supported by outgoing president Andrés Manuel López Obrador and comfortably defeated the centre-right opposition candidate, Xóchitl Gálvez.

Despite hailing from an explicitly left-wing party, National Regeneration Movement, both Obrador and Sheinbaum have largely expressed a willingness to work with Trump.

Obrador called Trump a “friend” in July, saying that the tariff pledge would hurt US-Mexican trade, while Sheinbaum had a “very cordial” first conversation with Trump following his election.

Also in July, Obrador wrote in a letter to Trump:

"Economic integration between our nations is so intense and widespread that to take such a measure would be tantamount to calling for a rebellion on both sides of the border because of the damage it would cause to people, industry and commerce."

USCMA was negotiated between various members of the political spectrum: the right-wing Trump, the left-wing Obrador and the centrist Canadian prime minister Justin Trudeau.