Mexican business leaders brace for Trump’s tariffs: ‘We must take his threats very seriously’

In the lead-up to Donald Trump’s arrival at the White House, business leaders across the border are bracing for a storm. The Republican’s threat to impose 25% tariffs on Mexican imports if the Mexican government fails to curb migration and drug trafficking has put significant pressure on both the Sheinbaum administration and the business community. This issue is far from trivial — more than 82% of Mexico’s exports are directed to the United States, a relationship that has made it the U.S.’s largest trading partner, surpassing China and Canada. From January to October of this year, the value of these exports topped $424 billion, marking a 6.4% increase compared to the same period in 2023, according to official data.

Business leaders and experts agree that the imposition of tariffs on Mexican goods would slow the flow of foreign currency into Mexico and hinder new U.S. projects within the country. Many also contend that these potential tariff barriers contradict the spirit of the U.S.-Mexico-Canada Agreement (USMCA), the trade pact that went into effect in 2020 to replace NAFTA and which will undergo review in June 2026 in the midst of a contentious debate about its future relevance. Beyond the statements for or against the deal, specialists believe that Trump’s protectionist stance will likely prompt a far more rigorous review of the treaty than originally anticipated.

José Medina Mora, president of Mexico’s business association Coparmex, emphasizes that neither Mexico nor the United States would benefit from a tariff war, and he remains hopeful that bilateral dialogue can resolve the dispute. “We must take President-elect Trump’s threat of 25% tariffs on Mexican imports very seriously if Mexico does not address migration and fentanyl issues,” he says. Regarding the USMCA review, Mora notes that the business community is already working with the Mexican government on key negotiation points. “The trade agreement has been highly beneficial for Mexico’s economy and businesses, it has allowed us to grow, and the objective is to remain in the USMCA and ensure that the North American region consolidates itself as the most competitive in the world,” he concludes.

César de Anda, a poultry businessman and president of the Advisory Council for Innovation, Growth, and Sustainable Economic Development, agrees that Trump’s tariff threats must be taken seriously. “In the agricultural sector, implementing a tariff on Mexican fruits or vegetables would be very costly for the American consumer,” he says. De Anda believes that in response to the protectionist rhetoric, Mexico’s government must engage with the private sector to form a united front. “It will be essential to create a common block between Mexico and the United States in as many private economic sectors as possible,” he argues

With less than two months remaining before Trump’s inauguration, the automotive sector — one of the biggest beneficiaries of the NAFTA/USMCA trade deal — is under particular scrutiny. Mexican officials have warned that if tariffs are imposed, three major U.S. companies based in Mexico — Ford, General Motors, and Stellantis — will be significantly impacted. From January to November 2024, Mexico’s automotive industry exported 3.2 million vehicles, of which about 2.5 million, or 80%, were destined for the U.S. market, according to INEGI.

Behind closed doors, major foreign automakers in Mexico are proceeding cautiously, awaiting Trump’s actions once he takes office on January 20. In a recent interview with Bloomberg, Miguel Barbeyto, Mazda’s director in Mexico, confirmed that they are already evaluating a “plan B” should Trump go through with his tariff threat.

Fernando Turner, an automotive businessman and former Secretary of Economy of Nuevo Leon, predicts that if tariffs are applied to vehicles manufactured in Mexico, U.S. importers will bear the brunt of the cost. However, he warns that, in the long term, these importers will likely pressure Mexican manufacturers to lower prices to offset the tariff costs. “Unless punitive tariffs are imposed specifically for issues like fentanyl and migration, I don’t think the tariffs will be high — perhaps eliminating the advantage of the USMCA, which would increase costs by 2-3%,” he explains.

“If punitive tariffs of 10 to 20% were implemented, which I don’t think will happen, they wouldn’t last more than a few weeks,” Turner adds. “It would be necessary to negotiate the United States’ conditions on migration or fentanyl, which are not commercial. In any case, Mexico should seek to ensure that the tariffs are applied only to the non-regional components of exports — in other words, those originating from Asia. Also, in the case of non-punitive tariffs, Mexico should seek to ensure lower rates than those applied to Asian exports.”

From pessimism to caution, private sector representatives in Mexico are waiting to see if Trump follows through with the policies he has announced since his campaign. Julio Carranza, president of the Mexican Banking Association, suggests that Trump’s threats are still being made within a political context. That’s why he is calling for caution until the new administration take office in January 2025 and outlines its position. “In banking, we are completely confident that President Claudia Sheinbaum will vigilantly protect our country’s interests during the USMCA review in 2026,” Carranza told the media last week.

“Keep a cool head”

As Trump’s presidency draws closer, pressure is mounting on the Sheinbaum administration. The Mexican president has repeatedly stated that tariffs on exports would harm businesses on both sides of the border. “Tariff after tariff would lead to a loss of competitiveness, what we want is to complement each other,” Sheinbaum said recently at the National Palace. One of Mexico’s primary arguments against the tariffs is the inflationary effect they would have, as rising prices on Mexican exports to the U.S. would be detrimental to both economies. From Mexico’s perspective, Trump’s protectionist stance would ultimately harm the U.S. economy as well.

Marcelo Ebrard, Mexico’s Secretary of Economy, has expressed confidence that Mexico will not be provoked by Trump’s threats. He noted that the government is already preparing for a meeting with U.S. authorities once Trump assumes office, though no specific date has been set. “I think that we will reach an agreement, and we are already preparing everything to have meetings with the next government of the United States, but there is still no date. We must keep a cool head, be intelligent. What we seek is to protect trade between the two countries, which is immense,” Ebrard said.

Experts argue it is better to reach an agreement than agree to a bad deal with the U.S., Mexico’s main trading partner. Export, investment, and remittance data highlight the interwoven economic ties between the U.S. and Mexico. Cutting off this flow with a tariff wall would harm both nations. The question remains: will the incoming U.S. president take these factors into account, or will he proceed with his reindustrialization policy based on tariffs and trade barriers?

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