The Tariff War

By: Elián Zidán

Donald Trump hasn’t even taken office yet, and he’s already threatening to impose tariffs of up to 25% on Mexico, Canada, and China.

The news hit like a bullet—not just for North America, but for the entire world. The U.S. president-elect claims that illegal migration into his country is fueled by the shared border, and that fentanyl—the deadliest drug of recent years—is trafficked through Mexico.

But here's the catch: this isn't the first time Trump has made such a threat. Back in 2019, during his presidency, he used the same tactic, and under pressure, Mexico deployed troops along its southern border to curb the flow of migrants.

Now, with Claudia Sheinbaum at the helm, the situation could change. Mexico has spent decades championing free trade, strengthening its economy through agreements like NAFTA and the USMCA.

However, Trump's tariff threats expose the vulnerability of the country to the unilateral decisions of its neighbor to the north.

The most worrying part is that Trump views the economic relationship between the two countries in simplistic terms, disregarding the complex social and economic factors that drive migration and drug trafficking.

After Trump’s announcement, all eyes turned to Palacio Nacional (the Mexican presidential palace). And this is where things began to get complicated.

First, Sheinbaum sent a letter to Trump, warning that for every tariff he imposes, Mexico will retaliate with one of its own—potentially jeopardizing businesses that rely on binational trade.

Then, the president declared that she had had a “wonderful conversation” with Trump, during which they agreed that relations between their countries would be positive.

But the accounts of what was actually discussed don’t align. Trump stated on his platform that Sheinbaum had agreed to “stop migration through Mexico,” which would imply “immediately closing the southern border.” In response, Sheinbaum clarified on "X" that Mexico’s position is not to close borders but to “build bridges.”

Beyond the misunderstandings, everyone is focused on whether the issue of tariffs was actually addressed.

This is critical because Mexico sends around 80% of its exports to the United States, and if tariffs are imposed, the consequences could be disastrous for both countries' economies.

U.S. companies with manufacturing operations in Mexico would also be severely impacted. Even Marcelo Ebrard, Mexico’s Secretary of Economy, warned that if tariffs are implemented, as many as 400,000 jobs could be lost in the U.S.

The tariffs would hit key sectors such as automotive, electronics, and agriculture—industries that are vital for both countries.

Moreover, the prices of basic goods would rise, negatively affecting consumers in both nations, creating a vicious cycle of mutual harm. At its core, the impact would be global.

For Sheinbaum, this is a complex challenge. Any concession could be perceived as a weakness in the face of Trump, which could spark discontent among her supporters.

Her stance of “building bridges” instead of “closing borders” reflects her attempt to balance international relations with the defense of human rights, though navigating this will not be easy.

Mexico stands at a critical crossroads. Maintaining its free trade model while facing Trump’s tariff threats will be a major challenge over the next four years.

While Sheinbaum has opted for dialogue, a more assertive approach may be necessary if the tariffs are enforced.

Moreover, the business sector will play a crucial role in adapting to new conditions and safeguarding the country’s competitiveness. In this scenario, the relationship with the United States could change drastically, and Mexico will need to negotiate firmly and diversify its trade relations to secure its economic future.