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Global Impact Of The New US Tariffs

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Mexico Is Out of Danger


The announcement made today by the United States government has shaken international trade: tariffs will be imposed on virtually the entire world, with the exception of Mexico and Canada, the American giant's main trading partners. This measure, promoted by former President Donald Trump and now revived by the current administration, seeks to protect US industry, but has generated strong global reactions.

Although exempt from these new tariffs, Mexico is not entirely reassured. President Claudia Sheinbaum met today with the Business Coordinating Council and the economic cabinet to assess the potential impact of the measure and define preventive measures.

However, the final strategy of the so-called "Mexico Plan" to strengthen the national economy will not be presented until April 3, during the morning press conference "La Mañanera del Pueblo." On the other hand, China, Japan, and South Korea, historically economic and geopolitical rivals, have decided to join forces to counter the effects of US tariffs. This economic alliance could transform global trade and challenge US hegemony, which would imply new trade dynamics for Mexico and Latin America.

In Latin America, the presidents of Argentina and El Salvador, Javier Milei and Nayib Bukele respectively, reacted strongly to the US measure, but their countries were not excluded from the tariffs. This could mean a severe blow to their economies, increasing pressure on their governments to strengthen regional alliances and diversify markets.

The strengthening of the Mexican peso against the dollar, despite the US tariff news, can be explained by several economic factors and market perceptions:

  1. Tariff Exemption for Mexico and Canada: By being excluded from the new tariffs imposed by the United States, Mexico positions itself as a more attractive destination for investment and trade. This generates confidence in the markets, boosting demand for the Mexican peso.

  2. Positive Expectations for the "Mexico Plan": President Claudia Sheinbaum's meeting with the Business Coordinating Council and the economic cabinet, along with the announcement of an economic strategy on April 3, has generated optimism about measures that will strengthen the Mexican economy. Investors anticipate stability and growth, which is boosting the peso.

  3. Foreign Direct Investment (FDI) Flow: The uncertainty created by tariffs in countries such as China, Japan, and South Korea could redirect investment to Mexico as a safe alternative within the USMCA. This strengthens the local currency.

  4. Confidence in the USMCA: The continued existence of Mexico and Canada in the free trade agreement with the US provides a secure framework for trade, benefiting the Mexican economy and, consequently, the Mexican peso.

  5. Hedging and Financial Operations: International investors may be taking long positions in the Mexican peso, anticipating an appreciation. It is also common for Mexican and foreign companies to adjust their currency hedges in response to the news.

  6. Mexico's Economic Resilience: Despite global volatility, Mexico has shown strength in its macroeconomic indicators, with controlled inflation and a prudent monetary policy.

The market reaction reflects confidence in Mexico in the face of a complex context. Investors view the country as a safe haven amid the tariff storm, which strengthens the Mexican peso.

The "Mexico Plan" promises to strengthen the national economy through investment incentives, export promotion, and strategic cooperation with Canada. President Sheinbaum is expected to present concrete measures that will benefit key sectors such as manufacturing, technology, and agriculture, taking advantage of the USMCA agreement.

The Mexican business community has expressed both relief and caution at the news. Although the country was exempt from tariffs, global economic uncertainty could generate indirect challenges, such as a reduction in foreign investment or instability in emerging markets.

The global outlook is becoming increasingly complex. Mexico's strategy, centered on strengthening "Plan Mexico," will be key to leveraging the country's competitive advantages and addressing a volatile economic environment.
We will have to wait for "La Mañanera del Pueblo" on April 3 at 7:30 a.m. to learn the direction the country will take, which will benefit most from Donald Trump's decisions.