Mexico | 25% tariffs on Mexico: unlikely to be long-lasting

Summary

On February 1, the White House announced that it would impose tariffs of 25% on imports (not all imports, which leaves open the question of whether they will be selective) on Mexico and Canada and 10% on China (in addition to those already faced).

Key points

• Key points:
• It is unlikely that these will be long-lasting, but if they are, the impact will be negative on both economies.
• 25% tariffs would have a very negative impact on Mexico's investment and competitiveness.
• Likely effects on exchange rate and interest rates in the 25% tariff scenario: lower monetary policy rate despite a substantial depreciation of the peso
• Nearshoring will continue to be an opportunity, as the United States will be more restrictive with the rest of the world, particularly with China, than with Mexico and Canada.

Geographies

Topics

Tags