Eneas De Troya / Wikimedia
Donald Trump delays introduction of tariffs on goods from his southern neighbor by one month
President Trump changes his mind at the drop of a hat. On March 3, the President of the United States announced to everyone that he would introduce the largest 25% tariff on Mexican and Canadian goods in a century. «Mexico and Canada have no choice… The tariffs, as you know, are ready. They will go into effect tomorrow», declared the US president.
Trump used these tariffs to renegotiate and conclude a new North American Free Trade Agreement between the United States, Mexico and Canada (USMCA), which he himself had signed in 2018. His rationale was to accuse Mexico and Canada (?) of allowing too many illegal drugs and migrants to enter the United States through their territories.
According to the American media, Trump has been repeating the accusation that «Mexico is sending its worst citizens to the United States and stealing American manufacturing jobs» ad nauseam since his 2024 election campaign.
On March 4, Trump kept his word and introduced a 25 percent tariff on goods from Mexico and Canada. However, just 48 hours later — after stock prices fell and Republican officials expressed concern about the economic consequences — he delayed the implementation of these tariffs for 30 days, until April 2.
In response, Prime Minister Trudeau imposed tariffs on $20.5 billion worth of American goods, including agricultural products.
Claudia Sheinbaum’s strategy differed from Canada’s. She decided to delay announcing any countermeasures her government might take, opting instead to negotiate directly with the American president.
Mexican President Claudia Sheinbaum resolved the issue with a single phone call. She and Trump agreed to pause the «tariff war» until April 2, at which time they would reassess the trade situation. The pause applies to all Mexican goods and services covered by the United States-Mexico-Canada Trade Agreement (USMCA).
Sheinbaum postponed retaliation and opted for unilateral concessions. Mexico deployed an additional 10,000 National Guard troops to its northern border to stem the flow of fentanyl and migrants into the United States. It also extradited 29 powerful drug cartel leaders — some of the most brutal criminals in the history of Mexican organized crime — to the United States.
Sheinbaum also agreed to accept deportees from other countries and oversee most of the logistical processes involved in removing migrants deemed undesirable from the United States, including pressuring other nations to accept their own deported citizens.
This was one of the Trump administration’s key demands. In exchange, according to Sheinbaum, the U.S. government would work to stop the flow of weapons into Mexico. However, this commitment seems highly questionable given that the United States — despite UN prohibitions — is unable or unwilling to stop arms shipments to violence-plagued Haiti.
On Sunday, March 9, Sheinbaum held a massive rally of 350,000 people in Mexico City’s main Zócalo (Plaza de la Constitución). She declared, «We cannot compromise our sovereignty, and decisions made by foreign governments must not affect our people».
The President’s approval rating immediately jumped 15 points to 85%.
Once again, the Mexican President was able to postpone the threat of a 25% U.S. tariff on Mexican exports, but it was not definitively resolved.
Trump’s tariffs represent a turning point in the relationship between these neighboring countries. Mexican economists are calling it a «tariff war», in which Mexico has no chance of winning and the United States has little chance of avoiding serious domestic economic repercussions.
There is no question that Mexico’s economy is vulnerable to a trade war. Higher tariffs could easily tip the country into recession.
Mexico is one of the largest foreign suppliers of goods to the United States, with automobiles, trucks, and auto parts accounting for the largest share of its exports. Other major export categories include electrical equipment, industrial machinery, computers, and household appliances. Other major exports include petroleum products, agricultural goods, medical equipment, plastics, and textiles.
According to a report by the Wilson Center, a Washington-based think tank, Trump’s 25 percent tariffs could cost Mexico $42 billion in lost exports.
Data from Bloomberg Economics suggests that unilaterally imposing a 25% tariff on Mexican goods could reduce Mexico’s GDP by about 16%, hitting the auto industry the hardest. Mexico sends nearly 80% of its manufactured cars — about 2.5 million vehicles per year — to the United States.
At the same time, Mexico is the top buyer of U.S.-refined oil, which meets more than 70% of its domestic demand. As a result of the U.S. tariffs, fuel prices are likely to rise, increasing costs at the pump and negatively impacting the country’s overall economy.
If Mexico retaliates, the biggest losers would be U.S. fuel exporters, as well as the automotive sector and other high-tech manufacturers, including pharmaceutical companies.
In 2024, the United States imported $505.8 billion in goods from Mexico and exported $334 billion, resulting in a trade deficit of $171.8 billion — 55 percent higher than in the last year of Trump’s first term. From 2023 to 2024, the trade deficit between the two countries increased by 12.7%, further inflaming an already angry Trump.
A majority of Americans believe President Donald Trump is too «unpredictable» in his attempts to shake up the U.S. economy, as his tariffs on some of the country’s largest trading partners have taken a toll on stock markets.
The threat of a trade war between the two nations has also changed the way Mexicans view the United States, and President Trump in particular. According to the Mexican polling firm Buendía & Marquéz, the percentage of respondents in Mexico who felt that «the relationship between Ms. Sheinbaum and Mr. Trump is at least good» dropped significantly between last November and February, while the percentage who viewed the current U.S. president negatively rose from 66% in early January to 80% in mid-February.
It remains difficult to predict how this new chapter in the «trade war» between the United States and its major trading partners will end, but forecasts indicate that tariffs will hurt GDP and fuel inflation in all countries involved. Several academic studies show that the tariffs Trump imposed during his first term not only affected foreign companies, but also harmed local businesses and American consumers. History is repeating itself — once again in the form of Trump.