Mexico’s president Sheinbaum shares counter-measures plans for Trump tariffs

After 30 days of waiting, a trade war between the US and Mexico seems to be taking shape. As Trump’s 25% across-the-board tariffs on its US neighbors go into effect today, Mexico is set to announce its countermeasures.

Mexico’s president, Sheinbaum, says they are “responding with tariff and non-tariff measures” to the 25% tariffs imposed by the US. Their plans will be announced on Sunday. Mexico is one of the biggest US trade partners.  

The 25% duties will affect more than $918 billion worth of US imports from Canada and Mexico. Canada has already fought back with a package of tariffs on $107 billion of US products, some immediate.

In addition, as of today, Trump’s second move doubled the rate of tariffs on Chinese imports to 20%. In return, China has responded with up to 15% duties on US farm goods such as chicken and pork, to start on Monday. 

This means three nations against one. Trump believes that America can stand alone economically. However, the response that markets are giving, especially to American companies, does not show that.

The United States is fighting its top trade partners  

Since he was elected president in November, the president has focused on China, Canada, and Mexico. He has threatened to put high tariffs on their goods if they don’t lower the unacceptable amounts of drugs coming into the US.

China was immediately hit with 10% tariffs. However, Canada and Mexico were given a 30-day grace period. 

China has not shown interest in hearing the US out. China’s finance ministry said in a statement, “The US’s unilateral tariff increase damages the multilateral trading system, increases the burden on US companies and consumers, and undermines the foundation of economic and trade cooperation between China and the US.”

Justin Trudeau, the Canadian prime minister, has announced Canada would target US beer, wine, bourbon, home appliances, and Florida orange juice. If Trump’s tariffs remain in effect for an additional 21 days, tariffs will be imposed on an additional $86.2 billion of US goods.

Trudeau said, “Tariffs will disrupt an incredibly successful trading relationship.” He also added that they would violate the US-Mexico-Canada free trade agreement signed by Trump during his first term.

However, according to Trump, higher tariffs on goods coming into the US from other countries are seen as a way to make America great again. This is by getting political and economic concessions from allies and rivals on the world stage.

The change will impact trillion-dollar trade and raise prices for everything from cars to medicine. It will also make it harder for the US to get along with its main trading partners. The US Census Bureau says that they will be worth $2.9 trillion in 2024, with more than 40% of that amount coming from China, Canada, and Mexico.

Mexico and other trade partners feel the heat

Imported items are very important to the American economy. The types of goods that are brought into the US most frequently are machinery-related goods, electronics, and car parts. A big chunk of these goods come from Canada, China, and Mexico. This means that prices for everything from new cars to smartphones to bicycles could soon go up.

The US has a trade deficit, which means it imports more goods than it exports. Tariffs could help close that gap by making foreign goods more expensive and encouraging Americans to buy goods made in the US. 

Even the fear of tariffs might be able to do some of that by encouraging manufacturers to move their operations to other places. The processes will not necessarily be moved to the United States, though.

Tariffs will make consumer goods more expensive, but Trump has hinted that he might lower or get rid of the personal income tax with the money from the tariffs.

That could help people who are having a hard time because of sky-high debts and rising prices of things like milk and eggs. But most of the trillions of dollars that the government got last year came from income taxes. 

Meanwhile, the Canadian dollar and the Mexican peso fell to their lowest levels in a month. In addition, after major declines in US markets on Monday, Asian markets were also down. The Nikkei was down by 1.6%, the TWII index was down by 0.5%, and the Hang Seng was down by 0.3% in Hong Kong.

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now