The Mexican peso continued to depreciate against the US dollar on Wednesday morning, losing ground for a third consecutive day to reach an exchange rate of almost 20 pesos to the greenback.
At 5 p.m. Mexico City time, one dollar was trading at 19.91 pesos, according to Bloomberg.
The peso closed at 19.69 to the dollar on Tuesday, according to the Bank of Mexico.
Donald Trump’s tariff threats, a general strengthening of the dollar and a lower growth forecast for the Mexican economy from the International Monetary Fund are among the reasons why the peso has depreciated this week after closing at around 19.30 to the greenback last Friday.
In an interview at the Economic Club of Chicago on Tuesday, former president Trump repeated his threat to impose hefty tariffs on vehicles imported to the United States from Mexico if he wins the Nov. 5 presidential election in the U.S.
He even cited a figure of 2,000%, although in subsequent remarks he only went as high as 300%.
“I’m going to put the highest tariff in history, meaning I’m going to stop them from ever selling a car into the United States,” said the Republican Party presidential candidate, who also asserted that “the most beautiful word in the dictionary is tariff.”
“… China is building massive auto plants in Mexico. And they’re going to build them, and they’re going to take those cars and sell them into the United States,” he said.
Foreign exchange news website FX Street reported that the peso “depreciated over 1.60% against the US dollar on Tuesday after Donald Trump threatened to whack prohibitory tariffs on Mexican-made autos entering the US market.”
FX Street reported that the peso also “depreciated in early trading on Wednesday as the US dollar strengthened amid a mixed market mood with falling U.S. Treasury yields.”
The peso has depreciated significantly since the comprehensive victory of President Claudia Sheinbaum and the ruling Morena party at Mexico’s June 2 elections.
A major factor in the currency’s decline in recent months has been concern over the government’s judicial reform, which was approved by a Morena-dominated Congress in September and signed into law by former president Andrés Manuel López Obrador just before he left office.
Since the peso reached its strongest position this year — 16.30 to the dollar in April — the Mexican currency has depreciated by more than 18%.
Last month it depreciated to above 20 to the dollar for the first time since October 2022.
With reports from El Economista, Aristegui Noticias and FX StreetÂ
So is Trump only targeting Chinese vehicles made in Mexico or ALL vehicles, including those made by GM, Ford, Chrysler, etc., as well as the parts that are produced for these vehicles? If it is the latter then there needs to be a response from US auto makers as this will materially affect their business model.
I was asking myself the same question. I do not know what General Motors or Ford build in Mexico that goes to the U.S. but I know Toyota has a HUGE plant that makes the Tacoma pickup truck and they ship a massive amount of those to the U.S. market.
Chinese vehicles need to be hit with the largest tariffs ever seen anywhere. China is trying to take over Mexico economically. Even Presidenta Sheinbaum asked the U.S. how to decrease Mexico’s reliance on Chinese made products.