MEXICO CITY, Nov 27 (Reuters) - Mexican President
Claudia Sheinbaum said on Wednesday Mexico would
retaliate if U.S. President-elect Donald Trump followed
through with his proposed 25% across-the-board tariff,
a move her government warned could kill 400,000 U.S.
jobs and drive up prices for U.S. consumers.
"If there are U.S. tariffs, Mexico would also raise
tariffs," Sheinbaum said during a press conference, in
her clearest statement yet that the country was
preparing possible retaliatory trade measures against
its top trade partner.
Mexican Economy Minister Marcelo Ebrard, speaking
alongside Sheinbaum, called for more regional
cooperation and integration instead of a war of
retaliatory import taxes.
"It's a shot in the foot," Ebrard said of Trump's
proposed tariffs, which appear to violate the USMCA
trade deal between Mexico, Canada and the U.S.
Ebrard warned the tariffs would lead to massive U.S.
job losses, lower growth, and hit U.S. companies
producing in Mexico by effectively doubling the taxes
they paid. "The impact on companies is huge," he said.
The proposed tariffs would hit the automotive sector's
top cross-border exporters especially hard, Ebrard
added, namely Ford (F.N), opens new tab, General Motors
(GM.N), opens new tab and Stellantis (STLAM.MI), opens
new tab.
Ebrard noted that 88% of pickup trucks sold in the U.S.
are made in Mexico and would see a price increase.
These vehicles are popular in rural areas that
overwhelmingly voted for Trump.
“Our estimate is that the average price of these
vehicles will increase by $3,000,” Ebrard said.
Sheinbaum and Trump spoke by phone later on Wednesday,
the Mexican president said on social media platform X,
adding the two discussed "strengthening collaboration
on security issues" and that the conversation was
"excellent."
In a post on his Truth Social platform, Trump said
Sheinbaum "agreed to stop migration through Mexico, and
into the United States, effectively closing our
Southern Border." He described the conversation as
"very productive".
Sheinbaum's office did not immediately respond to a
request for comment from Reuters.
Trump has previously said the tariffs would remain in
effect until the flow of drugs - particularly fentanyl
- and migrants into the U.S. was controlled.
Sheinbaum added migrant caravans are no longer arriving
at the U.S.-Mexico border "because they are attended
to" in Mexico.
A caravan of several thousand migrants had been heading
through southern Mexico but numbers have dwindled in
recent days.
Many analysts regard Trump's tariff threats as more of
a negotiating tactic than trade policy.
"The lack of a clear link between this threat and
questions related to trade suggests the new president
plans to use tariffs as a negotiating strategy to
achieve goals largely unrelated to trade," said David
Kohl, chief economist at Julius Baer.
PROFIT WIPED OUT
Mexico's automotive industry is the country's most
important manufacturing sector, exporting predominantly
to the United States. It represents nearly 25% of all
North American vehicle production.
Analysts at Barclays said they estimate the proposed
tariffs "could wipe out effectively all profits" from
the Detroit Three automakers.
"While it's generally understood that a blanket 25%
tariff on any vehicles or content from Mexico or Canada
could be disruptive, investors under-appreciate how
disruptive this could be," they wrote in a note on
Tuesday.
Brian Hughes, a spokesperson for Trump's transition
team, said the tariffs would protect U.S. manufacturers
and workers from "unfair practices of foreign companies
and foreign markets."
Hughes said Trump would implement policies to make life
affordable and more prosperous for his country.
GM and Stellantis declined to comment. Ford did not
comment on how the threatened tariffs would affect its
business but said it manufactures more vehicles in the
United States than most major automakers.
Mexico's automotive industry group AMIA said it would
prepare for any possibility and wait to see what formal
actions are taken.
The Institute of International Finance, a trade group
for the global financial services industry, warned
Mexico-U.S. relations would be challenging going
forward.
"The imposition of tariffs, eventually leading to
increased protectionism, and other policies affecting
exchange rates and commodity prices could have
significant implications for the region," it said in a
note.
The USMCA is up for review in 2026.
Katia Goya, director of international economics at
Grupo Financiero Banorte, said it was likely the three
USMCA countries would seek wholesale renegotiation of
the pact rather than just rubber-stamp it to continue
in its current form.
"The effect of a trade-conflict situation is that it
will mean lower economic growth in the United States,
higher unemployment and higher inflation," Goya said.
Ebrard said USMCA trade amounted to $1.78 trillion in
the first nine months of this year.
"We can fragment and divide with tariffs," Ebrard said.
"Mexico does not want conflicts and divisions, but to
build a stronger region."
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