Tariffs between Mexico and the United States could have a negative impact on both economies due to various factors. On one hand, tariffs could affect competitiveness by increasing the cost of inputs used in production, which would in turn raise prices for consumers. There would also be the possibility of inflationary pressures that would hinder the ability of the Bank of Mexico to lower interest rates.
In the event that the United States imposes tariffs on Mexico, some suggest that Mexico should respond in the same manner by applying tariffs on U.S. products. However, the imposition of tariffs would result in increased production costs in North America, which could negatively impact both economies.
It is unlikely that the United States will maintain a 25 percent tariff on Mexico for an extended period, given its negative effect on the productivity of the U.S. manufacturing sector, especially in the automotive industry, which largely depends on imports of Mexican auto parts. This would increase the production process costs and raise prices for U.S. consumers.
In light of these tariff threats from the United States, Mexico has followed a strategy of not threatening retaliation, but rather highlighting its contribution to the competitiveness and prosperity of both countries. Mexico complements the U.S. industry in complex value chains and is crucial for sectors such as food, where a significant portion of U.S. imports come from Mexico.
It is important to consider that tariffs transform into an export tax, which could affect the competitiveness of the countries involved in trade exchange. Furthermore, tariffs could have negative effects on monetary policy and the purchasing power of the affected countries.
In the face of the possibility of a permanent implementation of tariffs, Mexico could choose not to respond in kind. The effects of such a measure could impact the monetary policy of the Federal Reserve, slow down the economy, and even lead it into a recession. Therefore, it is crucial to carefully analyze the implications of tariffs and seek alternatives that benefit both economies.
