Starting February 1, 2025, Mexico will face the imposition of tariffs on its exports, a measure announced after Donald Trump's presidential inauguration, which is expected to have devastating consequences for the country. Gabriela Siller Pagaza, director of Economic Analysis at Grupo Financiero BASE, warned that the imposition of taxes on Mexican products would take the dollar to historic levels, reaching 25 pesos this same year.
Siller explained that if the new president of the United States decides to apply a 25% tariff on all Mexican products, the dollar could reach 25 pesos per unit. With lower tariffs, such as 5% or 10%, the exchange rate would rise to 21.50 or 22 pesos respectively, with varying impacts on Mexican exports.
In case a 25% tariff is implemented, it is forecasted that the Mexican economy would enter a recession in 2025, with growth rates below 0.0%, job destruction, and significant loss of investments. This situation would be comparable to exiting the USMCA, the free trade agreement between Mexico, the United States, and Canada, which represents a significant part of the Mexican GDP.
Siller highlighted that a recession implies a widespread decline in economic activity for several months, reflected in people's incomes, the decrease in formal employment, wholesale and retail sales, as well as industrial production, with negative consequences for investments and the country's public revenues.
Regarding the likelihood of a 25% tariff being applied to Mexico, the specialist indicated that although it is unlikely due to inflationary pressures and disruptions in the United States supply chains, Trump will carefully evaluate this measure. It is more feasible that it starts with lower tariffs that could gradually increase if the migratory flow persists. The logistical complication of applying a 25% tariff increases the chances that the rate will ultimately be reduced or even eliminated in the short term if implemented.
