Trump tariffs on Mexico: the good, the bad, the unknown

Mexico dodged the reciprocal tariffs imposed by US President Donald Trump connected dozens of nations, but its automotive assemblage is successful occupation aft immoderate parts were deed with 25-percent tariffs. Photo: SANDY HUFFAKER / AFP
Source: AFP

At archetypal glance, Mexico got disconnected lightly from Donald Trump's "Liberation Day" tariffs blitz.

The US president has repeatedly threatened the United States' apical trading spouse with punishing tariffs implicit amerciable migration and cause smuggling.

So it was a astonishment erstwhile helium near Mexico disconnected the database of nations connected which helium imposed levies ranging from 10 to 50 percent.

The alleviation successful Mexico, which has a free-trade woody with the United States and Canada, was tempered by interest implicit the 25-percent levies Trump slapped connected foreign-made imported vehicles.

That includes immoderate of the 3 cardinal vehicles the Latin American state sends northbound crossed the borderline each year.

AFP looks astatine however Mexico, whose President Claudia Sheinbaum has been walking a diplomatic tightrope with Trump, fared generally:

The bully

Mexico avoided the 10-percent broad tariffs imposed by Trump connected respective Latin American countries, including ones with staunchly pro-Trump governments specified arsenic Argentina and El Salvador.

For the infinitesimal astatine least, immoderate Mexican exports to the United States stay tariff-free.

Analysts astatine BBVA slope said the information that Mexico faced a little level of comparative protectionism "could springiness it advantages successful accessing the US marketplace and, therefore, attracting investment."

They said it could enactment arsenic an inducement for nearshoring -- companies moving their operations to Mexico from different countries to usage it arsenic a tariff-free oregon low-tariff larboard of introduction to the United States.

"It would simply beryllium much profitable oregon little costly to export these goods from Mexico than from countries with higher tariffs," BBVA said.

During Trump's archetypal presidency from 2017-2021, scores of Chinese companies relocated their accumulation to bluish Mexico to debar tariffs -- a bony of contention for the Republican leader.

The atrocious

Parts of Mexico's captious automotive industry are reeling aft being deed with 25 percent tariffs, which travel a period aft Trump imposed levies connected different goods from Mexico and Canada not covered by the United States-Mexico-Canada-Agreement (USMCA) commercialized deal.

Mexico's alloy and aluminum exports to the United States have, since March, besides been taxable to 25 percent tariffs.

"We shouldn't beryllium taxable to these tariffs simply due to the fact that the USMCA statement provides otherwise," Juan Francisco Torres-Landa, a spouse astatine consulting steadfast Hogan Lovells successful Mexico City, told AFP.

The automotive tariffs are peculiarly achy for Mexico.

In caller years, respective large automakers including Ford, General Motors, BMW, and Audi person outsourced portion of their accumulation to Mexico due to the fact that of its tariff-free entree to the United States.

Under Trump's caller rules, US conveyance parts volition not look tariffs. But manufacturers accidental that with automotive components crossing the US-Mexico borderline aggregate times during the assembly process, it is astir intolerable to ascertain which are American.

Torres-Landa called the proviso "gibberish."

"A car indispensable person astir 10,000 parts; tracking them to spot what you wage (tariffs) for and what you don't wage for is simply a precise analyzable equation," helium said.

A time aft the tariffs were announced, the shockwaves are inactive being felt.

Stellantis (born retired of the merger of Fiat Chrysler and Renault) said it would instantly intermission accumulation astatine immoderate of its Mexican and Canadian plants.

Volkswagen, meanwhile, indicated it would halt obstruction shipments of vehicles made successful Mexico to the United States, Automotive News said.

The Mexican authorities said Thursday that implicit the adjacent 40 days it volition effort to negociate "the champion conditions" with the Trump medication for the automotive, steel, and aluminum industries.

The chartless

The uncertainty caused by Trump's repeated threats of steep tariffs has already caused a slowdown successful manufacturing activity.

While the Mexican authorities has forecast economical maturation of astir 1.5 percent this year, analysts surveyed by the cardinal slope said this week they expected it to travel successful overmuch lower, astatine 0.5 percent.

In the country's bluish concern borderlands, location to thousands of factories built to service the US market, Mexicans fearfulness wide layoffs.

"I deliberation hard times are coming," trucker Omar Zepeda told AFP successful the borderline metropolis of Tijuana this week.

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Source: AFP