Mexico, vulnerable to trade war between powers due to its opening to the outside world

Mexico’s exports to the United States have grown, so its high dependence on foreign trade makes it vulnerable to tariff wars, affecting its balance of payments, exchange rate and inflation.

Thus, a trade war started by the United States, which would cause disruptions in world trade, is one of the main risks for the global economy in 2025, economic analysts warn.

Mexico has benefited from nearshoring and the trade war between the United States and China, becoming its main supplier of goods. It mainly exports vehicles and auto parts, which represent more than 30 percent of its total sales to the northern neighbor, consolidating its position as a manufacturer in the global market.

In 2024, Mexico will consolidate itself as the main supplier of goods to the United States, highlighting the automotive industry and technological manufacturing. However, it faces challenges compared to other emerging Asian countries that are gaining relative presence in this market.

The analysis area of ​​CIAL Dun & Bradstreet explained that the United States’ largest trade deficit is with China, although it has been reduced since 2018, when a trade war began between them: mutual imposition of tariffs and other trade restrictions.

This shows that, in a war of this type, the loser is the surplus country. It has already happened to China and must be considered by Mexico, in the face of tariff threats from the United States and in view of the upcoming review of the T-MEC in 2026. Under no circumstances would it be in Mexico’s best interest to get involved in a tariff war with the United StatesCIAL warned.

Mexico faces the threat of tariffs on its exports to the United States, as part of President-elect Donald Trump’s likely trade and immigration policies for 2025.

Given the country’s trade and investment relationship with its northern neighbor, the Mexican economy and financial markets will be negatively affected. This will result in lower economic growth for Mexico in 2025.said Alfredo Coutiño, director for Latin America at Moody’s Analytics.

It foresees that the United States government could impose a 10 percent tariff on Mexican exports in the second quarter of 2025 and maintain it until the end of the year. It also anticipates that the Mexican government will respond with a similar tax on imports from the United States.

Mexico is directly affected by the United States tariff through a reduction in demand for its exports, since its products will be more expensive for American consumers. And since Mexico would retaliate, this would reduce demand in that country.

However, in the end, Mexico’s trade account will be negatively affected, since the reduction in exports will be greater than that of imports, because the proportion of the former in relation to the United States is double that of the latter. . Therefore, the reduction of the country’s trade surplus with its northern neighbor will have real effects on the national economy.