Mexico warns Trump tariffs would kill 400,000 US jobs, threatens retaliation

By Sarah Morland, Raul Cortes and Brendan O’Boyle

MEXICO CITY (Reuters) -Mexican President Claudia Sheinbaum stated on Wednesday Mexico would retaliate if U.S. President-elect Donald Trump adopted via together with his proposed 25% across-the-board tariff, a transfer her authorities warned may kill 400,000 U.S. jobs and drive up costs for U.S. shoppers.

“If there are U.S. tariffs, Mexico would additionally increase tariffs,” Sheinbaum stated throughout a press convention, in her clearest assertion but that the nation was making ready doable retaliatory commerce measures towards its prime commerce companion.

Mexican Economic system Minister Marcelo Ebrard, talking alongside Sheinbaum, referred to as for extra regional cooperation and integration as an alternative of a warfare of retaliatory import taxes. 

“It is a shot within the foot,” Ebrard stated of Trump’s proposed tariffs, which seem to violate the USMCA commerce deal between Mexico, Canada and the U.S.

Ebrard warned the tariffs would result in large U.S. job losses, decrease development and hit U.S. corporations producing in Mexico by successfully doubling the taxes they paid. “The impression on corporations is large,” he stated.

The proposed tariffs would hit the automotive sector’s prime cross-border exporters particularly onerous, Ebrard added, particularly Ford (NYSE:F), Normal Motors (NYSE:GM) and Stellantis (NYSE:STLA).

Ebrard famous that 88% of pickup vans offered within the U.S. are made in Mexico and would see a worth enhance. These automobiles are fashionable in rural areas that overwhelmingly voted for Trump.

“Our estimate is that the typical worth of those automobiles will enhance by $3,000,” Ebrard stated.

Sheinbaum and Trump spoke by cellphone afterward Wednesday, with the 2 discussing subjects on the prime of Trump’s agenda.

Trump had stated the tariffs would stay in impact till the circulation of medication – notably fentanyl – and migrants into the U.S. was managed.

In a submit on his Reality Social platform, Trump stated Sheinbaum “agreed to cease migration via Mexico, and into the US, successfully closing our Southern Border.” He described the dialog as “very productive.”

Sheinbaum later responded on X that she had laid out Mexico’s migration technique, which “attended to” migrants earlier than they arrived on the U.S.-Mexico border, in her name with Trump.

“Mexico’s stance is to not shut borders, however to construct bridges between governments and their peoples,” she added.

In after-hours buying and selling on Wednesday, Mexico’s peso strengthened by as a lot as almost 1% towards the greenback, reversing losses logged in earlier days.

Many analysts regard Trump’s tariff threats as extra of a negotiating tactic than commerce coverage.

“The dearth of a transparent hyperlink between this risk and questions associated to commerce suggests the brand new president plans to make use of tariffs as a negotiating technique to attain objectives largely unrelated to commerce,” stated David Kohl, chief economist at Julius Baer (SIX:BAER).

PROFIT WIPED OUT

Mexico’s automotive trade is the nation’s most necessary manufacturing sector, exporting predominantly to the US. It represents almost 25% of all North American car manufacturing.

Analysts at Barclays (LON:BARC) stated they estimate the proposed tariffs “may wipe out successfully all earnings” from the Detroit Three automakers.

“Whereas it is usually understood {that a} blanket 25% tariff on any automobiles or content material from Mexico or Canada might be disruptive, buyers under-appreciate how disruptive this might be,” they wrote in a be aware on Tuesday.

Brian Hughes, a spokesperson for Trump’s transition workforce, stated the tariffs would defend U.S. producers and staff from “unfair practices of overseas corporations and overseas markets.”

Hughes stated Trump would implement insurance policies to make life inexpensive and extra affluent for his nation.

GM and Stellantis declined to remark. Ford didn’t touch upon how the threatened tariffs would have an effect on its enterprise however stated it manufactures extra automobiles in the US than most main automakers.

Mexico’s automotive trade group AMIA stated it will put together for any chance and wait to see what formal actions are taken. 

The Institute of Worldwide Finance, a commerce group for the worldwide monetary companies trade, warned Mexico-U.S. relations can be difficult going ahead.

“The imposition of tariffs, finally resulting in elevated protectionism, and different insurance policies affecting change charges and commodity costs may have vital implications for the area,” it stated in a be aware. 

The USMCA is up for evaluation in 2026.  

Katia Goya, director of worldwide economics at Grupo Financiero Banorte (BMV:GFNORTEO), stated it was doubtless the three USMCA international locations would search wholesale renegotiation of the pact moderately than simply rubber-stamp it to proceed in its present type.

“The impact of a trade-conflict scenario is that it’s going to imply decrease financial development in the US, greater unemployment and better inflation,” Goya stated.

Ebrard stated USMCA commerce amounted to $1.78 trillion within the first 9 months of this 12 months.

“We will fragment and divide with tariffs,” Ebrard stated. “Mexico doesn’t need conflicts and divisions, however to construct a stronger area.”