By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > News > Trump’s economic and political threat to Mexico
News

Trump’s economic and political threat to Mexico

News Room
Last updated: 2025/03/24 at 9:59 AM
By News Room
Share
7 Min Read
SHARE

Unlock the White House Watch newsletter for free

Your guide to what the 2024 US election means for Washington and the world

Mexico will learn its fate just after April Fool’s Day. Donald Trump has called April 2 “liberation day”. For Mexicans, it will be the moment they discover the extent of the economic damage that Trump plans to inflict on their country.

Much of the global economy will probably be hit by the tariffs America is set to announce on April 2. But the stakes are especially high for Mexico, which sends 80 per cent of its exports to the US. Trump has already imposed 25 per cent tariffs on both Canada and Mexico. About half of these new duties were swiftly put on hold. But they could all be reimposed next week.

Mexico’s fate is worth watching for two main reasons. First, the economy’s unusual dependence on exports to the US means that Mexico’s social and political stability are at stake. Mexican economists believe that, in the worst-case scenario, Trump’s tariffs would cause a depression in their country.

The second reason is that Mexico offers a test case for how to deal with Trump. While Canada has hit back at the US with tough talk and reciprocal tariffs, Mexico’s President Claudia Sheinbaum has played nice. She has emphasised her respect for Trump and has for now refrained from imposing retaliatory tariffs. Sheinbaum has also agreed to send 10,000 more troops to guard the US-Mexican border and deported 29 high-profile drug cartel leaders to America.

Sheinbaum has been rewarded with praise from Trump, who has called her a “wonderful woman”. She is also enjoying sky-high opinion poll ratings at home. Internationally, she has been held up as an example of how to deal shrewdly with Trump’s America, with the New York Times praising her pragmatism and The Economist saluting her “diplomatic nous”.

Reality is more complicated. As Luis de la Calle, a leading trade economist, pointed out to me in Mexico City last week, Canada and Mexico have so far been treated pretty well identically by the Trump administration. Sheinbaum’s critics also say that she is damaging the Mexican economy and future investment by pressing ahead with a plan to fire all the country’s judges and replace them with elected officials.

With the local economy already struggling, Sheinbaum badly needs Trump to cut her a break. But, unfortunately for Mexico, Trump’s grievances go well beyond trade.

Last month, the White House asserted: “The Mexican drug trafficking organisations have an intolerable alliance with the government of Mexico.” Joshua Treviño of the pro-Trump America First Policy Institute commented approvingly that this statement was a “seismic pronouncement that heralds a new era of confrontation between the two nations”.

There is a serious debate in Republican circles about whether the US should use military force to strike the drugs cartels inside Mexico. This month, Defense Priorities, another think-tank that is influential in Trump world, warned: “‘Bomb Mexico’ is increasingly mainstream as a policy option for border security. It would be a grave mistake.” Some influential Mexicans will say quietly that it might not be such a bad thing if the Trump administration pushes their own government to take more aggressive measures against the drugs gangs — perhaps with significant American assistance.

The damage that the cartels are doing to Mexican society is highlighted by the horrifying discovery of an “extermination camp” in the countryside where kidnapped recruits to an organised crime gang seem to have been murdered. More than 100,000 people are registered missing in Mexico, many thought to be victims of the cartels.

But unilateral American military strikes against the cartels — while they might draw cheers from Trump’s base — would put the Mexican government in an impossible position. They would also risk drawing the US into another open-ended conflict without attacking the root causes of the problem, which include the flow of guns from the US to Mexico and America’s own demand for drugs.

By suggesting that tariffs are the right tool to deal with narcotics, illegal immigration and trade simultaneously, Trump has made it harder for Mexico to craft a reasoned response. So Sheinbaum is left trying to humour and flatter the US president, while hoping that he gets distracted or that his advisers make him see reason.

The reality is that tariffs would undermine the most advanced parts of Mexico’s economy and make the country poorer. That downward spiral would be likely to fuel nationalism and anti-democratic populism, while increasing the power of organised crime and driving more Mexicans to try to cross into the US.

Mexico’s greatest hope is that the US itself would recoil from the shared pain caused by a tariff war. Americans rely on cheap, reliable supplies from Mexico for everything from fruit and vegetables to car parts and medical equipment. Higher inflation would be felt quickly in the US, while the promised re-industrialisation of America would be a long time coming, if it ever happened at all.

Impoverishing and destabilising America’s southern neighbour and largest trading partner is obviously a bad idea — for the US and for Mexico itself. But, unfortunately, that is no guarantee that it won’t happen.

gideon.rachman@ft.com

Read the full article here

News Room March 24, 2025 March 24, 2025
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Turkey detains five mayors in latest crackdown on opposition

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Entire Gaza population at risk of famine, says UN

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

The court of King Donald

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Japan faces big decisions on tackling bond market volatility

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Chinese students shaken by US visa crackdown look for Plan B

Justin, a Chinese PhD student at an Ivy League university, had always…

- Advertisement -
Ad imageAd image

You Might Also Like

News

Turkey detains five mayors in latest crackdown on opposition

By News Room
News

Entire Gaza population at risk of famine, says UN

By News Room
News

The court of King Donald

By News Room
News

Japan faces big decisions on tackling bond market volatility

By News Room
News

Chinese students shaken by US visa crackdown look for Plan B

By News Room
News

US warns Brazilian judge over order to block user on rightwing video platform

By News Room
News

Hegseth says Chinese military action against Taiwan ‘could be imminent’

By News Room
News

Taylor Swift buys rights to her first six albums

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?