Mexico warns Trump’s tariffs will cut 400,000 jobs in the US and threatens retaliation

Written by: Sarah Morland, Raul Cortes and Brendan O’Boyle

MEXICO CITY (Reuters) – Mexico will retaliate if U.S. President-elect Donald Trump implements the 25 percent blanket tariff he has proposed, President Claudia Sheinbaum said on Wednesday.

Sheinbaum, at his regular press conference in the morning, stated that the country was preparing possible retaliatory trade measures against its largest trading partner and said, “If there are US tariffs, Mexico will also increase its customs duties.”

Speaking alongside Sheinbaum, Mexican Economy Minister Marcelo Ebrard called for greater regional cooperation and integration rather than a retaliatory import tariff war.

“This is a shot in the foot,” Ebrard said of Trump’s tariff proposals that appear to violate the USMCA trade agreement between Mexico, Canada and the United States.

Ebrard warned that the tariffs would lead to major job losses in the United States, reduce growth, and hit U.S. companies that manufacture in Mexico by effectively doubling the taxes they pay. “The impact on companies is huge,” he said.

Brian Hughes, a spokesman for Trump’s transition team, said the tariffs would protect U.S. manufacturers and workers from “unfair practices by foreign companies and foreign markets.”

Hughes said Trump will implement policies that will make life more affordable and more prosperous for his country.

HIT ON CARS

Ebrard added that the proposed tariffs would hit Ford, General Motors and Stellantis — the auto industry’s largest cross-border exporters — particularly hard and raise vehicle prices for consumers by thousands of dollars.

Mexico’s automotive industry is the country’s most important manufacturing sector and exports mainly to the United States. This represents approximately 25% of all North American vehicle production.

Analysts at Barclays said they predicted the proposed tariffs could “effectively wipe out all the profits” of the Detroit Three automakers.

“While it is generally understood that a 25% blanket tax on any vehicle or content from Mexico or Canada could be devastating, investors do not adequately appreciate how devastating it could be,” they wrote in a note on Tuesday.

GM and Stellantis declined to comment. Ford did not comment on how the threatened tariffs would affect its business but said it produces more vehicles in the United States than most major automakers.

Mexico’s auto industry group AMIA said it would be prepared for any eventuality and would wait to see what official measures would be taken.

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