Mexican President Sinbaum stated on Wednesday that if US President-elect Trump implements his proposed 25% blanket tariff, Mexico will take retaliatory measures. Her government warned that this move could lead to the loss of 400,000 American jobs and drive up prices for American consumers.

Sinbaum said at a press conference, "If the US imposes tariffs, Mexico will also raise tariffs," marking her clearest indication so far that the country is preparing retaliatory trade measures against its largest trading partner.

Mexican Secretary of Economy Marcelo Ebrard called for more regional cooperation and integration, rather than launching a retaliatory import tax war, while speaking alongside Sinbaum. "This is tantamount to self-destruction," Ebrard commented on Trump's proposed tariffs, which appear to violate the USMCA trade agreement between the US, Mexico, and Canada.

Ebrard warned that these tariffs would lead to a significant loss of jobs in the US, a slowdown in economic growth, and would hit US companies producing in Mexico hard, as the taxes they pay would effectively double. He said, "The impact on companies is enormous."

Ebrard added that the proposed tariffs would particularly severely impact the top cross-border exporters in the automotive industry, especially Ford (F.N), General Motors (GM.N), and Stellantis (STLAM.MI).

Ebrard pointed out that 88% of the pickups sold in the US are made in Mexico, and the prices of these vehicles will rise. Such vehicles are very popular in rural areas of the US, where the vast majority of voters supported Trump.

Ebrard said, "Our estimate is that the average price of these vehicles will rise by $3,000."

Sinbaum stated later Wednesday on social media platform X that she spoke with Trump, and they discussed "strengthening cooperation on security issues," calling the dialogue "very good."

Trump has stated that these tariffs will remain in effect until drugs flowing into the United States—especially fentanyl—and immigration are controlled.

Sinbaum added that the migrant caravans are no longer arriving at the US-Mexico border, "because they are being processed in Mexico."

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

David Kohl, chief economist at Julius Baer, said, "The lack of a clear connection between this threat and trade-related issues indicates that Trump plans to use tariffs as a negotiation strategy to achieve goals that have little to do with trade relations."

Mexico's automotive industry is the country's most important manufacturing sector, primarily exporting to the United States. It accounts for nearly 25% of all automotive production in North America.

Barclays analysts stated that they estimate the proposed tariffs "could completely wipe out all profits for the Big Three automakers in Detroit."

They wrote in a report on Tuesday, "While the market generally understands that Trump's imposition of a 25% blanket tariff on any vehicles or parts from Mexico or Canada could be destructive, investors are underestimating the potential extent of its damage."

Katia Goya, the head of international economics at Grupo Financiero Banorte, stated that the US, Mexico, and Canada are likely to seek a comprehensive renegotiation of the agreement rather than simply extending its current form.

Goya said, "The situation of trade conflict means that US economic growth will slow, unemployment will rise, and inflation will worsen."

Ebrard said that in the first nine months of this year, USMCA trade reached $1.78 trillion, stating, "Tariffs will cause division and fragmentation; Mexico does not want conflict and division but rather to build a stronger region."

Article shared from: Jinshi Data