Just a few months ago, it seemed nearly impossible to imagine that the Trump administration would hit Mexico with tariffs. Now, every day that Mexico largely avoids them brings a sigh of relief. At this point, Moody’s Analytics estimates that the effective U.S. tariff rate on Mexican goods is 13.5%, significantly higher than just a few months ago, but still relatively low compared to other countries. So how is it that Mexico has thus far been able to largely avoid the heavy blows of tariffs hitting so many other countries? How can it be that on the same day that Trump increased tariffs on Canada and reconfirmed them on nearly every other country in the world, Mexico yet again largely succeeded in dodging the bullet? These are important questions to analyze in order to predict what might happen going forward.
I first highlighted the “Claudia Sheinbaum case study” shortly after she was elected. I argued that she would be one of the most interesting and fascinating leadership case studies anywhere in the world to follow over the next few years. Making history by becoming the first female and first Jewish president of Mexico, she has a huge weight on her shoulders. She inherited a nearly zero-growth economy, increasing debt loads, high inflation and a strong currency. She has had to make important funding decisions on her predecessors’ expensive pet projects like the Maya Train, the Dos Bocas oil refinery, and the rapidly growing federal Bienestar welfare program. Cartel violence under her predecessor continued unabated. On top of all of that, she has faced new leaders in both the U.S. and Canada — each with a mandate for change in their own countries.
The U.S. has clearly been on the offensive against Mexico. Trump and several of his officials have at times accused her administration of having “an intolerable alliance” with cartels, being afraid of the cartels, and being unwilling to do anything significant against them. ICE officials have rounded up Mexican citizens in the U.S. and sent them to detention centers — with some even being sent to a U.S. military base in the east African country of Djibouti or the “Alligator Alcatraz” detention center in Florida. The U.S. government recently passed a 1% tax on all cash remittances leaving the U.S., a measure that disproportionately affects Mexican families. The CIA has been conducting covert drone operations over Mexico to spy on cartels. In commerce, Mexico has been accused of ripping off the U.S. in everything from tomatoes to steel. U.S. Homeland Security Secretary Kristi Noem even accused Sheinbaum of “encouraging violent protests” in the U.S. and has aired provocative anti-migration ads on Mexican TV.
I believe that Sheinbaum and her team have been putting on a masterclass on how to work with the Trump team. They have been incredibly calm, patient, measured, mature and professional in the way they have managed the U.S. relationship in the face of such a barrage of insults, accusations and actions. Some highlights of how they have responded:
- Sheinbaum has been having phone calls nearly once a month directly with Trump.
- Economy Minister Marcelo Ebrard has been in Washington every few weeks since Trump was elected to meet with U.S. trade and commerce officials.
- Sheinbaum’s administration has clearly attempted to avoid direct confrontation when Trump administration officials have (frequently) harshly criticized Mexico. They have responded to threats and criticisms with facts and data in the daily press briefings.
- Business organizations like the American Chamber of Commerce of Mexico and American Society of Mexico have supported her administration by diligently and tirelessly emphasizing the strategic benefits of the U.S.-Mexico relationship: the two countries’ co-production system, the significant value add created by goods made by the U.S. and Mexico, the interconnected supply chains, etc.
- Sheinbaum has emphasized the steps her government has taken to reduce fentanyl trafficking to the U.S., help stem the flow of immigrants at the border and crack down on cartel activity. Her administration has deployed 10,000 troops to the border, sent 29 cartel leaders to the U.S. for trial and dismanteled or destroyed more than 1,000 drug labs. She has also repeatedly emphasized how the U.S. has an important shared role in solving each of these problems.
- Her administration has looked to strengthen direct ties with other countries like Canada and Brazil without expressly suggesting that it is in response to threats from the U.S.
- Her team has taken steps to curb the flow of Chinese investments and goods into the country — raising tax rates on small-value packages from Shein and Temu, not encouraging investment of Chinese auto suppliers given the sensitivity of the U.S. administration, and cracking down on Chinese counterfeit goods.
Trump in return has not taken action against Mexico to the extent that he has against Canada, Brazil or countless other countries. He recently called out Canada’s lack of progress in stemming the fentanyl trade as justification for increased tariffs, yet significantly more fentanyl comes from Mexico. He doesn’t seem concerned that inflation will increase as a result of placing tariffs on top trade partners. So why is he ultimately treating Mexico less harshly on tariffs than other countries?
My sense is that Sheinbaum has actually won Trump’s respect. She has figured out how to appease him and give his administration what they want, while steering clear and not responding directly to their frequent insults and attacks. She has succeeded in explaining the challenges of quickly resolving cartel violence and drug trafficking while at the same time demonstrating some progress. Remarkably, she has been able to do this while still earning the trust of the Mexican people — evidenced by her most recent approval rating this past week of 80%.
Of course Trump could change his mind at any moment on literally any issue, but I think thus far Sheinbaum has done an exceptional job at steering her country in some very turbulent waters during some very tough times. That being said, she will have to continue to demonstrate her administration’s commitment and show progress on stopping the flow of drugs in order to continue to avoid tariffs in the future. I don’t agree with every domestic policy decision she has made, but I think she deserves a ton of credit and has my utmost respect thus far as Mexico’s leader.
Travis Bembenek is the CEO of Mexico News Daily and has been living, working or playing in Mexico for nearly 30 years.
