LDN - Business

Mexico says it will impose retaliatory tariffs on US with details coming Sunday

[March 05, 2025] By MEGAN JANETSKY and MARÍA VERZA

MEXICO CITY (AP) — Mexico's president said Tuesday the country will respond to the 25% tariffs imposed by the United States with retaliatory tariffs on U.S. goods, with details to come.

Mexico will announce the targeted products and other measures Sunday at an event in Mexico City’s central plaza, a delay that suggests Mexico hopes to de-escalate the trade war set off by U.S. President Donald Trump.

President Claudia Sheinbaum said the government is “going to wait” because she had planted to speak to Trump this week. Mexico’s government has said since January it had a plan ready for this scenario.

“There is no motive or reason, nor justification that supports this decision that will affect our people and our nations,” Sheinbaum added.

China and Canada responded immediately with measures Tuesday.

Lutnick says US could work out a deal with trade partners

Hours later, after stock markets took a hit, U.S. Secretary of Commerce Howard Lutnick said in a video posted to X that he was on the phone “all day” with Mexican and Canadian authorities.

Lutnick said it appeared the government was going to “work something out” with the trade partners, a deal that could be announced on Wednesday.

“It's not going to be a pause. None of that pause stuff,” he said. “Somewhere in the middle will likely be the outcome.”

Some 80% of Mexico's exports go to the United States, part of more than $800 billion in trade between the countries last year.

Sheinbaum called “offensive, defamatory and without support" the White House allegations that Mexican drug traffickers persist because of “an intolerable relationship" with the Mexican government. Trump has said he's targeting Mexico to force it to crack down on migrants and drugs entering the U.S.

She listed the achievements of her young administration against Mexico’s drug cartels, including seizing more than a ton of fentanyl and dismantling 329 methamphetamine labs. She also noted that Mexico sent the U.S. 29 drug cartel figures it requested last week.

“It’s inconceivable that they don’t think about the damage this is going to cause to United States citizens and businesses,” Sheinbaum said. “No one wins with this decision.”

Mexico's president also noted that Trump on Monday said he respected her, and she said she respected him as well: “The thing is finding a way to collaborate, of coordinating without subordinating anyone for the benefit of our people."

Trade experts expressed doubt over how long Trump’s tariffs would last, saying they would boost prices for American consumers including Trump’s base.

“It is going to do nothing to help with the food inflation in the U.S.,” said Timothy Wise, an expert on agricultural trade between Mexico and the U.S. “I don’t see it as sustainable. I don’t find it plausible that corporate folks who surround Trump are going to sit back and allow him to destroy their foreign markets.”

Tariffs could boost inflation, slow economic growth for both US and Mexico

Gabriela Siller, economic analyst with Mexican financial group Banco Base, said in the short term, the tariffs could boost inflation, disrupt economic trade flows and slow economic growth for both countries.

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Susano Cordoba, right, gestures towards trucks lining up to cross the border into the United States as tariffs against Mexico go into effect, Tuesday, March 4, 2025, in Tijuana, Mexico. (AP Photo/Gregory Bull)

But as she watched the gradually falling Mexican peso, she also noted “the exchange rate and volatility have not skyrocketed, as the market speculates that the U.S. government could withdraw the tariffs soon.”

Mexico has the most to potentially lose in a trade war with the U.S., and economists say extended tariffs would plunge Mexico’s economy into a recession.

But for now, Sheinbaum's approval ratings in Mexico are sky high. She has fanned nationalist sentiment since before Trump took office, frequently invoking Mexico’s sovereignty, promising it will negotiate from a position of equals and pushing back on Trump's name change of the Gulf of Mexico to Gulf of America.

Sunday’s public event announcing Mexico's retaliation will look to seize upon Sheinbaum’s popularity and the sense of national unity.

Still, that was little comfort to those whose livelihoods could be most affected.

At the U.S.-Mexico border, 58-year-old truck driver Carlos Ponce drove his truck packed with auto parts from Ciudad Juarez to El Paso, Texas, as he’s done for decades. But he and many others along the border were holding their breath.

‘Things could change drastically’

“Things could change drastically,” said Ponce, who worried that transporters like him could lose their jobs or have to drive longer distances to marine ports as Mexican manufacturers look for other trading partners.

Long lines of trucks marked the Ciudad Juarez border crossing ahead of the tariffs.

“There’s a lot of things that aren’t defined yet and I’m sure they’ll be rapidly redefined," said Alan Russell, the head of Tecma, an American company that helps manufacturing businesses set up shop in places like Ciudad Juarez.

He expressed doubt over Trump’s narrative that the tariffs would push American companies to return to the U.S. to set up factories: “Nobody is going to move their factory until they have certainty.”

Russell said just last week his company helped a new manufacturer that moved from North Carolina to Mexico because it was not able to find enough workers.

Manuel Sotelo, whose truck fleet moves products across the border every day, was shocked that tariffs went into effect after the steps Mexico's president has taken to comply with U.S. demands to crack down on cartels and fortify the border. They include sending 10,000 troops to the border.

“Mexico made huge leaps and bounds,” said Sotelo, a Trump supporter who has a bobblehead doll of him on display in his office. “I really did think yesterday afternoon or last night Trump would have reversed course.”

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