Mexico Warns of Punishment Tax if Trump Raises Tariffs: Inflation Back on Fire
1min read Mexican President Claudia Sheinbaum delivered a stern warning on Wednesday - if U.S. President-elect Donald Trump follows through on his proposed 25% across-the-board tariff on Mexican imports, Mexico will hit back with its own retaliatory tariffs.
Sheinbaum said the move could eliminate 400,000 U.S. jobs and drive up prices for American consumers, particularly for pickup trucks - 88% of which are manufactured in Mexico. If there are U.S. tariffs, Mexico would also raise tariffs, she stated bluntly during a press conference.
Mexican Economy Minister Marcelo Ebrard, speaking alongside Sheinbaum, condemned the proposed tariffs as a shot in the foot that would undermine the regional economic integration under the USMCA trade agreement. He warned they would trigger massive U.S. job losses, lower economic growth, and effectively double the taxes paid by American companies with production facilities in Mexico.
The tariffs would hit the automotive sector's top cross-border exporters hard, including Ford, GM, and Stellantis, Ebrard noted. He estimated the average price of U.S.-sold pickups would surge by $3,000.
Trump had linked the tariffs to controlling drug and migrant flows, but Sheinbaum said Mexico's strategy was to address migration before it reaches the border, not close it entirely.
Analysts warn the tariffs could wipe out all profits for Detroit's Big Three automakers. Trump's team defended them as necessary to protect American workers from unfair foreign practices.
The prospect of escalating trade tensions and retaliatory tariffs between the U.S. and its top trading partner raises concerns about a renewed surge in inflation as consumers face higher costs across a range of products.