Market analysts express concern about the potential economic repercussions in Mexico following the imposition of tariffs by Donald Trump, despite a slight fluctuation in the exchange rate. According to Francisco Campos, Chief Economist for Latin America at Deutsche Bank, the prolongation of these tariff measures could impact inflation, the exchange rate, and the fiscal targets of the Mexican government.
Deutsche Bank warns of a possible "significant shock" that could affect the Mexican economy, emphasizing the deterioration of the current account and the weakness of foreign direct investment. The German bank suggests that the pressures resulting from these actions would complicate the fiscal correction planned by Mexican authorities for this year. In a critical scenario, rating agencies could revise Mexico's credit outlook to negative, considering various factors including lower structural growth and macroeconomic imbalances.
On the inflation front, it is noted that the effects of the exchange rate and tariffs on U.S. imports could counteract the decrease in aggregate demand. The business sector warns that the tariffs imposed by Trump will not only weaken Mexico but also hinder competition with China.
Amid this uncertainty, Deutsche Bank's analysis suggests a possible scenario where, if tariffs remain in place for a long period, the risks of Mexican assets could be revalued, pushing the exchange rate towards 22 or 23 pesos per dollar. Despite the implementation of tariffs, the exchange rate has remained relatively stable. Regarding monetary policy decisions, it is suggested that the Bank of Mexico might underestimate the potential repercussions, and it is proposed that a lower interest rate cut than projected could be an option to counteract the negative effects.
