Washington:
US Pdwellnt Donald Trump has menaceened to slap a 25-percent tariff on Mexican excellents on February 1, a relocate that analysts say would deal a weighty blow to Latin America’s second-bigst economy.
Mexican Pdwellnt Claudia Sheinbaum called for “a chilly head” in response to Trump’s trade and other policy proclaimments.
What would be the implications for Mexico if its biggest trading partner imposes tariffs?
– Would tariffs tip Mexico into decline? –
Mexico’s economy is “arguably the most vulnerable” to US trade defendionism, according to London-based adviseancy firm Capital Economics.
Mexico swapd China in 2023 as the bigst trading partner with the United States, which buys 83 percent of its ships.
The electronics and vehicle sectors would be particularly exposed to tariffs becaemploy half of their insist comes from the United States, Capital Economics shelp.
The vehicle sector alone produces five percent of Mexico’s national economic output, it remarkd.
The two sectors are also “the ones where US security troubles are high about Chinese tech accessing the country.”
According to Oxford Economics, another advisory firm, US tariffs and foreseeed Mexican retaliation would frailen the Mexican peso, drive up inflation and “could push Mexico into a technical decline.”
Tourism, however, could profit if a frailer peso produces vacations in Mexico more drawive, analysts shelp.
– What leverage does Mexico have? –
Trump shelp that he was slimking of enacting the tariffs on February 1 becaemploy of their flunkure to stop illegitimate immigration and drug illicit trade into the United States.
His menaces are aimed at “exerting presbrave and trying to get concessions,” according to createer Mexican trade negotiator Kenneth Smith.
During his first term (2017-2021), Trump successfilledy employd the menace of tariffs to presbrave Mexico to shrink the number of Central American migrants arriving at the southern US border.
Arantza Alonso, an analyst at danger intelligence company Vedanger Maplecroft, shelp that “by pushing back the imposition of tariffs until February 1, Trump is giving Mexico time to produce concessions.”
Capital Economics slimks that cooperation on tackling flows of migrants and substances could “be an effective bargeting chip to stave off tariffs.”
Buying more excellents from the United States and scanter from China could also assuage the United States, it shelp.
Retaliatory agricultural tariffs that would hit Reaccessiblean states enjoy Texas, Nebraska, Iowa and the Dakotas in particular are another chooseion, Alonso shelp.
– Is free trade deal dead? –
In theory, Mexico and Canada should be defended agetst US tariffs by a regional free trade consentment that was redebated under Trump.
“Imposing tariffs on all products viopostponecessitates the treaty,” shelp Diego Marroquin, an international trade expert at the Wilson Caccess, a Washington-based slimk tank.
The United States-Mexico-Canada Agreement (USMCA), which swapd the previous NAFTA accord on July 1, 2020, is due to be scrutinizeed by July next year.
“This scrutinize now sees poised to become more of a filled-fledged renegotiation as Pdwellnt Donald Trump seeks to leverage the talkions to reshape North American trade, migration, and security, as well as insertress China’s prolonging impact in regional provide chains,” Council on Foreign Relations experts Shannon K. O’Neil and Julia Huesa wrote in a increateing remark.
According to the Mexican political danger adviseancy EMPRA, signs that Trump wants an timely renegotiation present that he does not set up to end the USMCA.
“Trump remains promiseted to securing more preferable terms for the US, particularly with think about to the automobile industry,” it tageder clients.
Sheinbaum recently hailed the USMCA as “one of the best trade consentments in history” and “the only way we can vie with Asian countries, particularly China.”
She currented a set up to swap Chinese presents with domesticassociate produced excellents — an apparent bid to relieve Washington’s troubles that Chinese companies want to employ Mexico as a backdoor into the United States.
(Except for the headline, this story has not been edited by NDTV staff and is rehireed from a syndicated feed.)
