Mexico vows to retaliate against Trump’s tariff threat

The US president-elect has pledged to impose a 25% tariff on all goods from the neighboring country 

Mexico is ready to retaliate if US President-elect Donald Trump carries out his threat to impose 25% tariffs on goods from the neighboring country unless it curbs the flow of drugs and migrants, President Claudia Sheinbaum has said.    

Sheinbaum, who took office in October, argued the penalties would do nothing to stop the flow of migrants or drugs bound for the US, but would only cause inflation and unemployment in both countries. Instead, she called for cooperation in tackling these challenges.   

“For every tariff, there will be a countermeasure, and so on until we jeopardize our common businesses,” Sheinbaum wrote in a letter to Trump on Tuesday.  

The warning comes after Trump said on Monday that he plans to levy sweeping duties on all Canadian, Mexican, and Chinese imports after he takes office in January as part of a crackdown on illegal immigration and the US fentanyl crisis.

Trump threatened to levy “a 25% tariff on all goods” coming from Mexico and Canada, “until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country.” He also threatened an additional 10% tariff on goods from China on top of existing duties.  

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Sheinbaum noted that Mexico suffers from an influx of weapons smuggled in from the US, and pointed out that the flow of drugs across the border is fueled by American demand. It is a “problem of public health and consumption in your country’s society,” she said.  

The US fentanyl epidemic and the subject of growing illegal immigration were hot topics during the 2024 American presidential election campaign. China banned the production of the synthetic opioid in 2019. Since then, Mexican drug cartels have switched to buying less controlled fentanyl precursor chemicals from Chinese companies and making the opioid in Mexico, from where it gets shipped to the US, the Drug Enforcement Administration said last month.  

Mexico, China, and Canada are the top three exporters to the US, according to the most recent US Census data. Mexico is the US’ biggest trading partner, making up 15.8% of total trade as of September. Canada is second at 13.9%.   

Analysts say that if imposed, the tariffs would send prices skyrocketing, particularly in the US, as American companies importing Mexican goods would be forced to raise prices.  

“What sense is there?” Sheinbaum asked, underscoring that higher cross-border tariffs would hit US carmakers with plants in Mexico, such as General Motors and Ford, particularly hard.   

Economists say, however, that it is unclear whether Trump would go through with his threat given that the US, Mexico, and Canada share a free trade agreement which bans imposing tariffs on the member countries.