Mexico: Trump tariffs will make pickups $3,000 more expensive
EL PASO, Texas (Border Report) – Mexico's finance minister says that the U.S. will be “shooting itself in the foot” by imposing a 25% tariff on goods coming from Mexico, including parts and whole vehicles for American automakers.
One of the most brazen examples of how President-elect Donald Trump’s threatened tariffs on Mexico will backfire is in the price of pickups so popular among U.S. consumers, Marcelo Ebrard said.
The price of those trucks will jump an average of $3,000, he said.
“What would be the impact of a 25% tariff on Mexico in terms of U.S. (consumer) prices? I was told (by the automakers) that, in their estimates, these vehicles would go up by $3,000 in the United States,” Ebrard said. “The main impact of this measure is against the U.S. consumer and some of the principal automakers in the United States. That’s why we say, ‘It’s a shot in the foot.’”
The finance minister added at least 400,000 American jobs will be lost to the tariffs given how dependent Detroit automakers are on Mexican labor and manufacturing capacity. That does not count the effect of retaliatory tariffs Mexico would impose on the U.S.
Ebrard’s comments at a Wednesday news conference in Mexico City broadcast on YouTube are part of the Mexican government’s response to public threats by Trump to slap a 25% tariff on Mexican imports if that country doesn’t do more to stem the flow of migrants to the U.S. or curtail the trafficking of fentanyl. Trump also has floated a 25% tariff on Canada and a 10% tariff on China.
The threats are already having repercussions on future investments in Mexico, are causing jitters in Mexican stocks and come a week after Moody's financial rating service downgraded Mexico's economic outlook from stable to negative because of mounting debt. The country's currency, the peso, also has been losing ground to the dollar.
On Tuesday, President Claudia Sheinbaum Pardo sent a letter to Trump refuting his assertions on drug trafficking and migrants and pointing out how the tariffs will be counterproductive to both nations.
On Wednesday, she gathered a cadre of Mexican and U.S. executives who backed Mexico’s position. Some expressed doubts that Trump really intends to enact the tariffs when he takes office in January.
“This policy – we don’t know if it’s policy or threat because we know how he handles himself – requires dialogue among the three countries,” said Gina Diez Barroso Azcarraga, president and CEO of Grupo Diarq. “It is a partner they will not let go because it is not advantageous to do so.”
The president of Mexico shares that opinion.
“We don’t believe it will happen,” she said at the news conference. “But, still, we have our plan.”
And she believes Trump is misinformed regarding Mexico’s efforts to stop unauthorized migrants within its borders -- the impetus behind the threatened tariffs.
“On migration, maybe Trump doesn’t know what we have done. (He) talks about a caravan (going to the United States), but it’s been dispersed,” Sheinbaum said. “All the work being done on migration – less migration from Mexico to the United States – is because of all that has been done here. [….] On security, we have a strategy and it’s yielding results. Will there be cooperation? Yes. Do we care about the (US-Mexico-Canada Agreement)? Yes.”
But she added her country is prepared to absorb the possible – and titanic – effects of a 25% tariff on her country’s exports.
She said Mexico will continue to honor its foreign debt payments and that massive, planned expenses on social welfare programs for the poor will stimulate internal economic growth through consumer spending. She also talked about expecting states in Mexico to share public costs with the federal government and of expanding trade with Brazil and other countries.
She called on her people to remain calm – again citing disbelief Trump really means to impose the tariffs – and stated intent to school Trump on how a united North America will prosper while a divided trade bloc will lose ground to Europe and Asia.