Mexico

Will Trump’s tariffs on Mexico take effect this Saturday?

United States President Donald Trump said on the first day of his second term that his administration could impose a 25% tariff on Mexican and Canadian exports to the U.S. on Feb. 1.

But will Trump actually act on his threat and hit the United States’ North American trade partners with a punitive tariff for what he says is their failure to stop, or at least limit, the flow of migrants and drugs into the U.S.? Even without first engaging in formal talks with Mexico and Canada?

 

According to U.S. government sources who spoke with The Wall Street Journal, the possibility is very real.

“He’s as serious as a heart attack,” said Republican Party Senator Kevin Cramer in reference to Trump’s tariff threat against Mexico and Canada.

Unnamed White House advisers told the WSJ that Trump feels that Mexico and Canada aren’t taking his threats seriously and wants to impose tariffs on their exports to prove he isn’t bluffing and to force them to negotiate on a range of issues including migration, drug smuggling and the USMCA free trade pact, which is up for review in 2026.

Citing “people familiar with the matter,” the WSJ reported last week that Trump was “using the threat of imposing stiff tariffs on goods from Canada and Mexico” as soon as Feb. 1 “to pressure the two nations to start renegotiating” the USMCA ahead of schedule.

Are US tariffs a ploy to speed up USMCA review? Thursday’s mañanera recapped

Trump himself said in late November that he would impose 25% tariffs on Mexican and Canadian imports on the first day of his second term and leave them in place “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

While he held off on the proposed tariffs last week, he laid the groundwork for their implementation by issuing an “America First Trade Policy” memorandum that directed the Secretary of Commerce to investigate the United States’ “large and persistent annual trade deficits” and “recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits.”

Trump uses Colombia as an example of his willingness to act against allies  

Trump said on social media on Sunday that he had been informed that “two [U.S. military] repatriation flights from the United States, with a large number of Illegal Criminals, were not allowed to land in Colombia.”

As a consequence, he announced that he had directed his administration to impose “emergency 25% tariffs” on all Colombian goods entering the United States.

“In one week, the 25% tariffs will be raised to 50%,” Trump wrote on Truth Social.

Colombian President Gustavo Petro said that Colombia — a long-standing ally of the U.S. — would retaliate with its own tariffs on U.S. goods.

However, a trade war was averted because, according to White House Press Secretary Karoline Leavitt, the Colombian government agreed to “all of President Trump’s terms, including the unrestricted acceptance of all illegal aliens from Colombia returned from the United States, including on U.S. military aircraft, without limitation or delay.”

“Based on this agreement, the fully drafted IEEPA [International Emergency Economic Powers Act] tariffs and sanctions will be held in reserve, and not signed, unless Colombia fails to honor this agreement,” Leavitt said in a statement on Sunday night.

An unnamed senior Trump administration official told the WSJ that the president’s decision to impose tariffs on Colombian exports, despite the subsequent pullback, demonstrated that Trump sees tariffs as an “effective negotiating tool” and “effective punishment” for countries that don’t fall into line with his agenda.

The official said that Trump is “very serious” about his threats to impose tariffs on goods from Mexico and Canada and expects them to cooperate.

Investment bank Goldman Sachs told clients last week that it sees a 20% chance that Trump will impose tariffs on Mexico and Canada this Saturday.

Tick-tock! This week will be pivotal 

By Goldman Sachs’ reckoning, Mexico has an 80% chance of averting the tariff Trump has said he could impose on its exports. But with just five days left until the U.S. president’s revised imposition date, the Mexican government will have to act quickly.

President Claudia Sheinbaum has said that her administration will seek to stave off the tariff threat through dialogue with the U.S. government. On Monday, she expressed her support for the agreement between Colombia and the United States, saying that it is “good because dialogue and respect must prevail.”

In response to repeated questions about Trump’s threats, President Sheinbaum has focused on the importance of collaboration with the United States. (Presidencia)

Sheinbaum said last week that “a process of talks” between the Mexican and U.S. governments had begun with a call between Foreign Affairs Minister Juan Ramón de la Fuente and Secretary of State Marco Rubio. She also said she was “convinced” that her government would reach agreement with the Trump administration on “different issues.”

No doubt the Mexican government will this week seek an agreement that wards off tariffs on Mexican exports to the United States, which is easily Mexico’s largest trade partner. But it remains to be seen whether it will have enough time — and whether the U.S. government will be willing — to reach a deal.

Unlike Colombia, Mexico last week did accept repatriation flights from the United States, according to Leavitt, although it reportedly denied one U.S. military plane access to land.

A White House official attributed the denial to an “administrative issue,” and Leavitt said on X on Friday that “thanks to President Trump” Mexico “accepted a record 4 deportation flights in 1 day” on Thursday.

“This comes in addition to unrestricted returns at the land border, the deportation of non-Mexicans, & reinstatement of Remain-in-Mexico. Mexico has also mobilized 30K National Guard,” the White House Press Secretary said.

While Mexico is receiving deportees  — and has developed a strategy to help them reintegrate into society — Trump tied his tariff threat to the northward flows of migrants and narcotics, and is therefore seeking increased action from the Mexican government to stem those flows.

Mexico hasn’t done enough to avoid tariffs, says US official 

Sheinbaum has repeatedly said that her government is willing to cooperate with its U.S. counterpart on the issues of migration and drug trafficking, albeit on the proviso that Mexico’s sovereignty is respected.

Multicolored pie chart from US Census showing the U.S.'s top sources of imports in November 2024. There are 11 pie pieces. The biggest piece is labeled "all others" and is valued at 86.8 billion USD. The next biggest piece is labeled "Mexico," valued at 42.2 billion USD.
Mexico is the U.S.’s top source of imports. (US Census)

Mexican officials have stressed that they are already taking strong action against narcotics, touting arrests of high-profile cartel figures and large drug seizures including the confiscation of more than 1 tonne of fentanyl in two busts in Sinaloa last month.

Sheinbaum has highlighted that encounters between United States authorities and migrants on the Mexico-U.S. border have fallen significantly and stressed that migrant caravans don’t reach the border “because they are taken care of” — or broken up — in Mexico.

However, the senior Trump administration official who spoke with the WSJ said that Mexico hasn’t yet done enough to avoid tariffs. The Journal reported that the official wouldn’t specify what other steps the Mexican government would have to take to avoid duties on its exports to the U.S.

Sheinbaum said late last year that Mexico would impose a retaliatory tariff on U.S. exports if Trump acted on his threat, but more recently she has focused on avoiding the commencement of a trade war.

Whether Mexico will be able to negotiate its way out of the tariffs remains to be seen, but the WSJ reported that some key figures in the U.S. government are not willing to talk — at least not yet.

“Protectionist advisers such as Commerce Secretary nominee Howard Lutnick and deputy chief of staff for policy Stephen Miller are advocating the tariff-first-talk-second approach, according to people familiar with the discussions,” the Journal reported.

However, “no final decisions on Canada and Mexico have been made,” the WSJ said.

In addition to imposing tariffs this Saturday, “other options are also in play,” the Journal said, explaining that they include “announcing tariffs on Feb. 1 but giving a grace period before they are implemented.”

The potential impact of tariffs on Mexico 

If the U.S. president were to impose a 25% tariff on Mexican exports in violation of the terms of the USMCA, the Mexican economy would go into recession, according to Gabriela Siller, director of economic analysis at Mexico’s Banco Base.

However, she said on X last week that it is “highly unlikely that Trump will impose a general 25% tariff on all products from Mexico, at least not for a long period of time.”

“A 25% tariff would be equivalent to leaving the USMCA,” Siller said.

“This would mean a structural change for the Mexican economy that would result in a severe recession, job losses, an increase in [employment] informality to rates above 60% and an increase in public insecurity.”

The WSJ reported that “a 25% tariff could grind the auto industry to a halt across the continent, depending on how it is imposed, because vehicles and auto parts cross borders several times before a final car is completed.”

Mexico’s auto industry is an economic powerhouse, generating almost US $194 billion in export revenue last year, according to national statistics agency INEGI.

With reports from WSJ 



Source: Mexico News Daily

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