What will happen to Mexico’s economy now that Donald Trump is the president-elect? If he implements some of the threats he made during his election campaign, there will be mass deportations of Mexican migrants and new tariffs on exports to the United States. He has also made threats against China, Europe, and Canada.
In a press conference on Wednesday morning, Mexico’s President, Claudia Sheinbaum, said: “I want to tell Mexicans that there’s no reason to worry about the American elections. Mexico always comes through. We are a free, independent, sovereign country, and I am convinced that we will have good relations with the United States.”
During the American election campaign, Sheinbaum kept quiet as threats and insults were hurled at Mexico.
Eventually, after constant pressure from journalists, she said: “Former president Andres Manuel Lopez Obrador had a good relationship with Donald Trump and defused many of his threats. The US is and will remain our privileged partner, as our economies have been interdependent for 30 years.”
Sheinbaum sent Trump a letter congratulating him on Wednesday. She has pledged to pursue good ties with the US. When she was younger, she attended the University of California, Berkeley, where she earned a Ph.D. in Energy Engineering. She speaks English fluently.
Trump’s first election campaign
In 2016, during Trump’s first election campaign, he threatened to rip up the North American Free Trade Agreement (NAFTA), build a 1,954-mile (3,145-kilometer) wall along the US-Mexico border, and tax migrants’ remittances (money they send back home to their families). He also said that Mexico would pay for the wall.
None of the threats came true and Mexico’s economy did not suffer. NAFTA turned into CUSMA (the Canada-United States-Mexico Agreement), which further deepened the three countrie’s economic relationships, remittances remained tax free, and the wall was never built except for about 80 miles of new barriers where there were none before.
Tariffs on Chinese Exports
Trump said he will impose large tariffs on Chinese exports. Mexico’s economy minister Marcelo Ebrard said that the measure would endanger American companies operating in Mexico.
Most goods that China exports to Mexico are from approximately fifty companies, many of which are US companies, Ebrard claims. After a meeting with representatives of Mexico’s retail association, Ebrard said:
“We have already faced circumstances regarding tariffs and we have come out on top because tariffs have a very big impact on the US economy.”
Trump pledged to impose 60% tariffs on Chinese imports and 20% on those from the rest of the world.
The US is by far Mexico’s number one trading partner. According to BBVA, 82.7% of Mexican exports went to the US as of the first quarter of 2024.
Mexico is the US’ main trading partner too. According to Statista, Mexico was the US’ top trading partner by import value in 2023. In 2023, the US imported $475.6 billion dollars’ worth of goods from Mexico, $427.2 billion from China, and $421.1 billion from Canada.
The Peso
Mexico’s currency, the peso, has enjoyed a period of unprecedented stability. For the last couple of years, its value has been slowly rising against the dollar.
During the whole of 2023 and half of 2024, it appreciated against the dollar and other hard currencies. In November 2022, one dollar was worth 19.6 pesos. By June 2023, the dollar had slipped to 16.25 pesos. It now stands at 20.8 pesos.
Analysts warn that, in the current environment, the peso is likely to experience a period of high volatility. If uncertainty about the country’s future persists, 2025 could be a challenging year as Mexico struggles to grow in a rapidly changing marketplace.
Conclusion
Trump made threats during his first election campaign in 2016, but none of them materialized. He has made more threats this year. What will happen to Mexico’s economy when he becomes president of the United States on January 20, 2025? Will he do the same as last time?
Mexico’s president, Claudia Sheinbaum, has assured that everything will be fine. We will have to wait and see.