Marcelo Ebrard, Mexico’s Economy Minister, warned on Monday of potential retaliatory tariffs on American imports should the incoming Trump administration impose tariffs on Mexican goods. Ebrard’s remarks, aired in an interview with Mexico’s Radio Formula, signal that Mexico is prepared to defend its economic interests amidst the renewed threats of trade protectionism from the United States.
The announcement comes in response to Donald Trump’s re-election campaign statements, in which he proposed reinstating tariffs of up to 25% on Mexican imports as a means to secure more favorable terms on immigration enforcement and trade agreements. Trump made similar tariff threats during his previous administration, leading to a period of heightened trade tensions between the two countries, with both sides discussing, but ultimately avoiding, sweeping tariffs.
Ebrard, a seasoned diplomat who previously served as Mexico’s foreign minister, minced no words regarding the impact such tariffs could have. “If you put 25% tariffs on me, I have to react with tariffs,” he said, expressing his determination to prevent unilateral economic measures from the U.S. “And what does that bring you? A gigantic cost for the North American economy.”
The United States and Mexico share one of the world’s largest trading relationships, deeply intertwined by trade agreements such as the United States-Mexico-Canada Agreement (USMCA). The two countries exchange goods worth approximately $1.7 billion daily, making any disruption in trade a considerable economic risk for both sides. Mexico is currently the United States’ largest trading partner, accounting for 14.9% of total U.S. trade, underscoring the economic interdependence of the two nations.
During Trump’s previous term, the former president aimed to renegotiate what he described as “unfair trade deals” and pressured Mexico to enforce stricter immigration policies to curb migration flows to the U.S. Trump’s proposal of a 25% tariff on Mexican goods was part of a broader strategy to press for policy changes, especially along the U.S.-Mexico border.
While those tariffs never materialized, Trump managed to extract significant concessions from Mexico, including increased immigration enforcement on its southern border with Guatemala. At that time, Ebrard, in his role as Mexico’s foreign minister, was instrumental in negotiating these terms to stave off the threat of tariffs. Ebrard’s statements now, as Economy Minister, echo the heightened concerns in Mexico over the potential economic fallout of such tariffs and signal a willingness to respond in kind should similar policies resurface.
Ebrard emphasized the economic drawbacks of a trade war for both the U.S. and Mexico. “Tariffs stoke inflation,” he noted, highlighting that increased tariffs would likely drive up consumer prices in the U.S., potentially affecting household spending and broader economic stability. Experts widely agree that a 25% tariff on Mexican goods would have significant implications, not only on Mexican exports but also on U.S. import costs, particularly for sectors that rely on affordable Mexican goods.
- Automobile Manufacturing: Mexico is a critical link in North American automotive supply chains, manufacturing components and assembling vehicles for American companies. Tariffs would increase production costs for U.S. automakers, potentially leading to higher car prices domestically.
- Agriculture: The U.S. imports substantial quantities of fruits, vegetables, and other food products from Mexico, and tariffs would drive up food prices.
- Consumer Goods: Products such as electronics, appliances, and textiles could face higher prices due to increased import costs.
Additionally, should Mexico retaliate with its own tariffs on U.S. goods, American exporters in industries like agriculture, machinery, and technology could face diminished competitiveness in the Mexican market.
Ebrard’s remarks reflected a broader concern over the economic implications of a trade dispute. He stated that escalating tariffs would bring “a gigantic cost for the North American economy.” Economists largely support Ebrard’s assertion, warning that the additional tariffs could lead to higher inflation rates in the U.S., which is already grappling with the residual effects of pandemic-era inflation.
In the current economic climate, where supply chain issues and inflation remain concerns, tariffs on goods from Mexico could exacerbate inflationary pressures. Higher tariffs would likely compel U.S. companies to pass these costs on to consumers, which would drive up prices on everyday goods.
According to a recent report from the U.S. Congressional Budget Office, tariffs on Mexican goods could add several percentage points to the inflation rate, a risk that might further complicate economic recovery efforts in both countries. This would put strain on the Federal Reserve’s mandate to maintain inflation stability, potentially forcing it to consider additional monetary interventions.
Despite his firm stance, Ebrard’s comments also suggested that Mexico would prefer to avoid a trade confrontation. Analysts note that his emphasis on the economic drawbacks of tariffs seems designed to dissuade the U.S. from pursuing aggressive trade restrictions. Rather than appearing confrontational, Ebrard framed the tariff dispute as a matter of economic logic, hoping to appeal to U.S. policymakers’ understanding of the broader economic impacts.
“Mexico understands that such measures are economically self-defeating,” remarked Dr. José Ángel Gurría, former Secretary-General of the Organisation for Economic Co-operation and Development (OECD). “The intention is to maintain a collaborative trade relationship that sustains both economies rather than detracts from them.”
The last time Trump threatened to impose tariffs on Mexico, the two governments managed to negotiate an agreement that avoided an all-out trade conflict. In 2019, when Trump proposed similar tariffs, Mexico agreed to a set of measures to reduce the number of Central American migrants reaching the U.S.-Mexico border, a move that temporarily appeased the Trump administration.
However, the stakes have risen since then. The global economy has seen significant shifts due to the COVID-19 pandemic, and the North American economy has become even more integrated. Consequently, any disruption would likely have a deeper impact than in previous years. Mexico’s economy has also diversified over time, and Mexico now boasts strong trading relationships beyond North America, particularly with European and Asian markets, which could soften the blow of reduced U.S. trade.
Ebrard’s comments also reflect the internal political pressures he faces. Mexico’s President Andrés Manuel López Obrador (AMLO) has committed to maintaining Mexico’s economic independence while strengthening trade relationships. The re-emergence of tariff threats from the U.S. puts AMLO’s administration in a delicate position. Appearing too lenient could be politically costly domestically, particularly among Mexicans who view Trump’s tariffs as an affront to Mexico’s sovereignty.
In the U.S., trade policy toward Mexico could also have political ramifications. While Trump’s stance appeals to a segment of his support base that favors protectionist policies, some American businesses have raised concerns over how tariffs could harm their operations. Particularly in states with substantial manufacturing and agricultural sectors dependent on Mexican trade, Trump’s trade policies could face opposition from local business communities.
As the world’s economy continues to recover from disruptions caused by the pandemic and other global supply chain issues, the prospect of a renewed trade war between Mexico and the U.S. poses risks to both nations’ economic stability. Experts note that the U.S.-Mexico relationship has progressed in recent years, with each country playing an essential role in North American supply chains. A breakdown in trade relations could jeopardize the progress made, creating ripples throughout the continent.
Ebrard concluded his interview by emphasizing the importance of maintaining an open dialogue with the U.S. to resolve these issues before they escalate. “Mexico is committed to working closely with the United States to ensure that both economies continue to thrive,” he said. “But we must also be prepared to defend our interests.”
