Mexico Official Suggests Retaliatory Tariffs in Response To Trump’s 25% Threat

Mexico’s government announced it has plans to impose retaliatory tariffs on U.S. goods if Donald Trump carries on his threats to impose tariffs on Mexican goods.

“If you put 25 percent tariffs on me, I have to react with tariffs,” Marcelo Ebrard, Mexico’s secretary of economy said, according to the New York Times. “Structurally, we have the conditions to play in Mexico’s favor.”

Ebrard’s comments come as Trump has threatened to immediately place 25 percent tariffs on all goods from Mexico unless its government halts the flow of migrants and drugs to the U.S. In addition, Trump has threatened to raise such tariffs as high as 100 percent if he’s not happy with the results.

According to the NYT, such moves could harm Mexico’s economy, which exports about 80% of its goods to the U.S. However, it could also deeply damage farmers and manufacturers of conductors in the U.S., which relies on exporting to Mexico.

“A tariff war doesn’t end well,” Valeria Moy, the general director of the Mexican Institute for Competitiveness, an economic research institute, told the NYT. “The United States stands to lose — and Mexico stands to lose even more.”

“The answer to tariffs is not more tariffs; it’s to sit down and negotiate,” Moy added.

Despite Ebrard’s plan to impose retaliatory tariffs, Mexico’s president Claudia Sheinbaum hasn’t echoed these plans. Instead she has said her government is eager to meet with Trump’s team and negotiate even before he takes office.

“It is important to get in touch, to know what they are thinking and to move forward in coordination as much as possible,” she told reporters on Monday.

Back in his first term, Trump immediately imposed tariffs on China to reduce the U.S. trade deficit. This led to China imposing retaliatory tariffs and to a trade war. Later the U.S. also imposed tariffs on Mexico, Canada, and the European Union. Both Mexico and Canada imposed retaliatory tariffs.

The tariff war in North America eased after the ratification of the United States–Mexico–Canada Agreement (USMCA) and after Mexico managed to impose a more strict policy on migration.

However, it is still unclear how different countries will react to Trump’s tariffs. The European Union has been preparing for a tariff war against the U.S. that could harm both parties.

Despite Trump’s claims that tariffs are paid by other countries, such as China, they are in fact, paid by U.S. importers. In addition, critics have warned that a widespread tariff war could raise prices, directly affecting consumers.