Monday, January 13, 2025

Mexico’s Economy Minister: 25% tariffs on Mexico would cost US 400,000 jobs

Economy Minister Marcelo Ebrard said Wednesday that the United States would be shooting itself in the foot if it imposes a 25% tariff on Mexican exports, as Donald Trump has pledged to do.

Speaking at President Claudia Sheinbaum’s morning press conference, Ebrard said that 400,000 jobs would be lost in the United States if Trump imposes the tariff he threatened to implement in a post to his social media site Truth Social on Monday.

Donald Trump stands at a microphone
Trump made the threat to immediately implement tariffs on Mexico and Canada upon assuming the U.S. presidency on his social media platform, Truth Social, on Monday (Gage Skidmore/CC BY-SA 2.0)

The U.S. president-elect said that his proposed 25% tariff on Mexican and Canadian imports would be imposed on the first day of his second term and remain in effect “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

Ebrard highlighted on Wednesday that a 25% tariff on Mexican exports would affect companies in the United States that operate in Mexico, “particularly” automakers that have long had a manufacturing presence here such as General Motors, Stellantis and Ford.

“What [Trump] is saying is, ‘Dear fellows, we are going to impose a tax on the most important North American companies in the world,'” he said.

Ebrard noted that retaliatory tariffs on United States exports – as Sheinbaum said Mexico would impose – would also affect General Motors, Stellantis and Ford because they send auto parts from the U.S. to their plants in Mexico.

“We’re very integrated, we bring some things from the United States, we produce others here, we incorporate them and you see it as a final product,” he said.

Ebrard stressed that a 25% tariff “is a tax” that would have an outsized impact on the auto sector in North America, “whose main exponents are these three large groups from the United States itself.”

Workers at a General Motors assembly plant in Mexico
According to a new Barclays analysis, Trump’s proposed 25% tariff could effectively “wipe out” all profits for the major auto manufacturing companies General Motors, Ford and Stellantis, all of whom rely on multiple plants in Mexico. (File photo/General Motors México)

“In other words, it’s a shot in the foot,” he said.

“The taxes – I say ‘taxes’ because a tariff is a tax; the 25% proposed tax would have a direct impact on [U.S.] companies because it’s equivalent to doubling the tax on profits,” Ebrard said, referring to the 21% corporate tax rate in the United States.

“In the end,” Ebrard added, a 25% tariff would “affect the consumer in the United States” and “around 400,000 jobs” in the U.S. “would be lost.”

That figure, he explained, is an estimate made by the Economy Ministry after consultation with the auto sector in the United States.

“That is the estimated impact that we’ve been able to calculate between the [tariff] announcement and now,” Ebrard said.

“… The main impact of this measure is on the consumer in the United States and United States companies [including] the three largest of the North American automotive industry. That’s why we say it’s a shot in the foot.”

Analysts at Barclays, Reuters reported, estimate that Trump’s proposed tariff “could wipe out effectively all profits” of General Motors, Stellantis and Ford, known as the “big three” among U.S. automakers.

“While it’s generally understood that a blanket 25% tariff on any vehicles or content from Mexico or Canada could be disruptive, investors underappreciate how disruptive this could be,” the analysts wrote in a note on Tuesday.

Division or the joint construction of a ‘strong, competitive region’?

Ebrard said “there are two options on the table” for Mexico, the United States and Canada, the three signatories to the USMCA free trade pact that is scheduled to be reviewed in 2026.

Migrants in Chiapas, Mexico, walking together in a caravan
A migrant caravan of about 2,500 in Tapachula, Chiapas, in early November, heading north toward the United States. (Damián Sánchez/Cuartoscuro)

“We can fragment and divide ourselves with accusations and tariffs – we can do that if we want …or we can together build a strong, competitive region that is prepared to lead the future and compete with other regions,” he said.

Mexico’s objective, “of course,” is to “create a strong region and not conflict and division,” Ebrard said.

The economy minister said that “the proposal that Mexico will prepare to achieve this” will be based on having “regional stability,” ensuring “shared prosperity” and increasing North America’s “global competitiveness.”

“We have to cooperate on security, on migration, on governance, on many issues,” Ebrard said.

Whether the Sheinbaum administration will be prepared to deploy additional monetary and human resources to combat the flow of migrants and drugs to the United States in order to stave off a 25% tariff on its exports remains to be seen, but the government led by former president Andrés Manuel López Obrador agreed to do so when Trump issued a tariff threat in 2019.

In a letter she sent to Trump on Tuesday, Sheinbaum highlighted the efforts Mexico is already making to reduce the number of migrants and the amount of drugs reaching the United States and gave no indication that Mexico was ready and willing to do more.

Alicia Bárcena with Antony Blinken in a meeting
In January, Mexican officials — including then Foreign Affairs Minister Alicia Bárcena, left — met with U.S. Secretary of State Antony Blinken and were told that the U.S. was pleased with Mexico’s efforts to curb illegal migration. (Secretary Antony Blinken/X)

However, Trump is clearly dissatisfied with Mexico’s existing efforts and appears determined to get Mexico to ramp up enforcement against migrants and drug traffickers.

Tonatiuh Guillén, head of Mexico’s National Immigration Institute for the first six months of  López Obrador’s six-year term, said earlier this month that the likelihood that Mexico will give in to pressure from Trump, as it did in 2019, is “high.”

With regard to “shared prosperity,” Ebrard said it should be an “objective” of Mexico, the United States and Canada.

Sheinbaum has made “shared prosperity” a priority of her government as it seeks to reduce wealth inequality in Mexico and ensure that foreign investment is spread more equitably across the country.

Ebrard said that “everything that goes against shared prosperity,” including “unnecessary taxes,” is inadvisable.

“… Tariffs fragment us, hinder the work of industry, cause jobs and competitiveness to be lost,” he said.

“The United States is affected first and foremost, but others are affected as well, Mexico and other partners.”

To increase North America’s global competitiveness, Mexico, the United States and Canada need to “optimize regional supply chains, maintain low costs … and work as a team,” Ebrard said.

“This [idea] has a lot of support in Mexico, in the United States and in Canada as well, and we think it is the correct, intelligent route for the circumstances the world is going through,” he said.

“… So, presidenta, we’re already working on this, on the strategy you gave us,” Ebrard told Sheinbaum.

“And we’re also accelerating conversations with the European Union to finish the modernization of the [trade] agreement with the European Union,” he said, adding that the ministry he leads is also “accelerating agreements with countries such as Brazil.”

By Mexico News Daily chief staff writer Peter Davies ([email protected])

20 COMMENTS

  1. VERY WELL SAID. I DO NOT UNDERSTAND WHY AMERICANS WHO VOTED FOR TRUMP DID NOT REALIZE IT WOULD COST THEM DEARLY IN THEIR OWN POCKET.

    I AM CANADIAN AND LIVE IN MEXICO.

    KEEP UP THE GOOD WORK MEXICO.

  2. I don’t know who would win a trade war but I can easily see Trump’s threat repackaged for just as good a reason to be used against him. I illustrate.” <>

    • Damn it the carrots killed by quote and this is what it was:
      The U.M.S. president said that her proposed 25% tariff on ail imports would be imposed on the next day of her term and remain in effect “until such time as the Iron River stops its Invasion of our Country!”

  3. No direct reference about the Cartels , Mexico keeps fighting Mr Trump proposals instead of fighting the Cartels , I don’t mind the tariffs, stop the illegal drugs coming into the USA please !!

      • Have you heard about offer and demand? The US fake war on drug was a scam: it failed miserably but nobody is paying attention north of the border: biggest consumers of drugs. How about the US take care of their drug addition and the influx of drugs by the cartels will dwindle.

    • It is a demand and supply problem. The US demands drugs, wants drugs and will do anything to get illegal drugs. Stop the use and the supply problem will go away. The money will not flow if there is no one buying the drugs!! The USA has a pharmaceutical industry that promotes drug use for everything imaginable and it is documented that they have been a cataylist for this overwhelming horrific environment.

  4. l love this guy. Stand up to the bully. Regardless of the bluster, like most of the time Trumpy runs his mouth, he hasn’t thought thru the ramifications. You would think that some of the more level heads around him (oops, my mistake…what level heads!) would prevail. If he keeps this up, it will be “you did not make America great again”!?!? Mexico can probably do something more about the borders, though that really is an American issue, but the cartels…things will get nasty and that still won’t solve the problem of American hunger for illicit drugs. Too much money involved and drugs will just get more expensive which will exacerbate other problems. If that is Trumpy’s opening negotiating tactic, he is looking for trouble!
    .

  5. That last time Trump instituted tariffs the US benefitted greatly. Somehow I didn’t read how many jobs Ebrard thinks Mexico would lose! A tariff is not always a tax. Often it is a way to encourage another country to do the right thing. In this case, all Mexico needs to do is act like a real neighbor and stop facilitating the illegal entry of millions of unknown people, many of whom are criminals and terrorists, into the US. It should also reclaim control over its side of the border from the cartels, and clamp down on the production and transportation of fentanyl.

  6. Want to stop drugs? Have U.S. citizens stop using. Come on Trump, you’ve got a solution for every problem. Oh, and that fence you had built during you’re first term – I spoke with la Presidenta today, she said the check is in the mail.

  7. USA globalist government traded good automotive factories and jobs for cartel profits. What I see is Trump first off asking to stop the flow of migrants and drugs, secondly the companies that left to comes back and if that distant work, they will face tariffs until they comply. Mexico doesn’t manufacture their own cars and Trump wants these American companies to come back willfully otherwise their products will be tariffed. Globalism is dead. Mexico should focus purely on their own products and export surplus. I can see potentially a period of greatly reduced trade coming instead of the one way street and depleting of American factories/companies for globalist profits. But the drug thing simply has to stop cold turkey along with illegal entry.

  8. I think it’s a hoot to see all the Canadian & American transplants who don’t work on the assembly line to support their families telling Mexico to stand and fight. We benefit from the devalued peso, we have more financial security than 95% of Mexico’s citizens, tariffs won’t affect us as most of what we buy is local. Yet because you dislike Trump you find it easy to tell Mexico to stand up to him. Yes, Trump is a narcissistic little shell of a man unfit to lead a parade let alone America, but show me anytime in history where standing up to the US has worked out well for the people of the challenging country. Most fail to understand Trump and his Party are not arguing economic conditions, they are framing this as a national security issue. As long as that remains the narrative, the idiots who empowered Trump will let it hurt their pocketbook. They argue the economy has been bad, so let it remain bad as long as they get to feel a sense of accomplishment retaliating against Mexico. Trump has no worry of prosecution, a cabinet of yes men, the House and Senate, most Governorships, and the vast majority of Americans on his side. Those of us who disagree with him are greatly outnumbered. He has bankrupted almost everything he has touched. Why should America be any different. If you think for a second that playing his game gives you a leg up, you’re as ignorant as those who empowered him. Yes Sheinbaum is intelligent, yes she is strong, but encouraging her to stoop to Trump’s level at the tremendous cost to her citizens is very irresponsible and privileged thinking. President Sheinbaum needs to do what is best for Mexico, not expats living their best life. Most of us left our home countries to escape the political, economic and social issues we didn’t agree with. We have no skin in this game. How welcome will we be if a trade war destroys Mexico’s economy long before America’s? Canada’s? Or when Trump ups the ante and places thousands of Mexicans in containment camps and starts deportations seriously impacting remittances? While he separates families again – many of whom from the first time haven’t been reunited with their families. Mexico has much more to lose and as foreigners we should simply encourage our host to do whatever is needed in their best interest, not ours. Trump isn’t even in office yet and he’s shaking up both Canada’s dollar & Mexico’s peso. He hasn’t done a thing and is winning. All he, and his henchmen want is to curb illegal immigration, cartel violence, and the perception of reducing the drugs/fentanal entering the US. Take his military support (money), go after a few narcos and quit blaming the US for a cartel leaders arrest, and put some troops on the borders. Done! All this BS goes away and Trump can say he solved everything that he promised. Do you really want to challenge him to see how far he is willing to go? Is it worth it? Es mas macho?

  9. I am so happy to see so many comments like ones I have made over and over again. As long as the U.S. DEMANDS illegal drugs, the cartels will SUPPLY them. The cartels and illegal drug use are 100% the fault of the U.S. Why doesn’t toddler-in-charge Trump deal with American addiction?? No addicts–no drugs!

  10. You are absolutely “right”. That is the “sole”purpose for the “tariffs”. To make it so “costly” for these American factories to do business in Mexico due to the “low” slave wages” on the Mexican worker and move their “factories”bact to the US, or pay the “tariffs”. It’s your “call”. The “tariffs are going to play a big role and have a “big impact” on the economy of Mexico. All the years of the past are OVER, a new “game plan”is going to be placed ” with new “rules”. Bottom line, Mexico, tighten your economic “belt” because a “giant” has arrived.

  11. I’ve enjoyed these very sharp comments but, though fully subscribed, can’t access the article itself from the MND emails to me. ANY OF YOU HAVING THAT PROBLEM? THANKS! (I have reported this to MND subscription email contact but to date have no response or solution)

LEAVE A REPLY

Please enter your comment!
Please enter your name here


President Sheinbaum stands at a podium during her morning press conference (mañanera), in front of a graph related to low inflation

8-billion-peso remodel planned for Mexico City’s AICM airport: Friday’s mañanera recapped

6
At Friday's presser, topics included AICM's renovation ahead of the FIFA World Cup, judicial election funding and Sheinbaum's sky-high approval ratings.
President Claudia Sheinbaum at a press conference in the National Palace, wearing a red turtleneck and a black blazer and pointing her index finger out at a spot in front of her beyond the camera.

Sheinbaum focused on reducing Mexico insecurity: Thursday’s mañanera recapped

2
President Sheinbaum and her cabinet on Thursday gave an update on the security situation in Sinaloa and overall efforts to reduce insecurity across Mexico.
Claudia Sheinbaum in mid speech while standing at the presidential podium during a press conference. She is looking forward with her gaze pointed toward her left and is holding her right hand up before her chest in a closed fist.

Sheinbaum to present ‘Plan Mexico’ to attract investment in the era of Trump

2
The president will share "a portfolio of very important investments” to reassure investors shaken by recent government transitions.