The Mexican government said Wednesday that the United States could suffer the loss of some 400,000 jobs and reduced economic growth if President-elect Donald Trump imposes 25% tariffs on the Latin American country upon coming to power, and warned of imposing them also.
The Republican has promised that when he takes office on January 20 he will impose a 25% tariff on imports from Mexico and Canada until those countries stop the arrival of drugs and migrants to the United States, a measure that would appear to violate the North American Trade Agreement (USMCA).
“We more or less think that, in the end, these taxes are going to affect the consumer in the United States but also companies and around 400,000 jobs would be lost,” said Economy Minister Marcelo Ebrard, based on an estimate for the neighboring country carried out with data from the automotive and auto parts industry, he detailed.
The official said the proposed tariffs would especially hit the auto industry’s biggest cross-border exporters, Ford, General Motors and Stellantis, and lead to thousands of dollars in car price hikes for consumers.
Mexico is the United States’ main trading partner and its automotive industry is the country’s most important manufacturing sector, exporting predominantly to the neighboring nation. The industry accounts for nearly 25% of all North American vehicle production.
Brian Hughes, a spokesman for Trump’s transition team, said the tariffs would protect American manufacturers and workers from “unfair practices by foreign companies and foreign markets.”
Hughes said the next ruler would implement policies to make life more affordable and prosperous for his country.
Neither Ford nor Stellantis immediately responded to requests for comment. GM declined to comment.
Analysts at Barclays said they estimate the proposed 25% tariffs against Canadian and Mexican imports “could effectively wipe out all profits” for the three Detroit automakers.
“While it is generally understood that a blanket 25% tariff on any vehicle or content from Mexico or Canada could be harmful, investors underestimate how damaging this could be,” they said in a research note.
Mexican President Claudia Sheinbaum sent a letter to Trump on Monday to tell him that tariffs will not solve drug trafficking or migratory waves, and warn him that the measure will only bring similar responses from the affected governments, more inflation and fewer jobs.
On Tuesday, one day after the American president-elect’s announcement, the Mexican peso fell sharply to its lowest level in more than two years. At mid-morning on Wednesday it was still with losses but with a marginal drop after having fallen 0.55% to 20.7390 units per dollar at the opening.
“If there are tariffs, Mexico would also raise tariffs,” said the president. He also revealed that the Government is preparing a plan for this scenario, but reiterated that he does not think it will happen. “We do not believe that a situation of this type will arise.”
In a podcast by the Mexican Grupo Financiero Banorte broadcast on Wednesday, the bank’s Director of International Economy, Katia Goya, said that “the imposition of tariffs is very likely to be accompanied by a response in the same sense, from other countries.”
“The only thing the effect of a trade conflict situation will mean is lower economic growth in the United States, higher unemployment and higher inflation,” he stated, and stressed that Mexican imports are key to the development of the United States economy. .
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