Economics: Clock ticking on Trump’s rolling tariff deadlines as Mexico’s trade with China could become a new source of pressure
Although Trump decided at the beginning of March to pause his blanket 25% tariffs for another month, there remains a high probability that the steel and aluminum tariffs that Washington has planned to go into effect this Wednesday, March 12, will materialize. Meanwhile, there remains the threat to apply tariffs to automobiles, pharmaceuticals and semiconductors starting in April, coinciding with the conclusion of the studies he ordered to determine the possible imposition of reciprocal tariffs.
Over the weekend, Trump mentioned that the measure was intended as a "small respite" for US automakers. This statement is relevant because it shows that the most important thing in the White House’s thinking is the pressure exerted on large US companies that stand to be harmed by the tariffs, thereby encouraging them to relocate part of their production to the US or reduce investments in China. In this context, it is anticipated that the narrative against Mexico could shift towards pushing for the imposition of tariffs on China and limiting China's participation in the Mexican economy. This week’s Outlook analyzes the recent evolution of trade between Mexico, the US and China with a focus on the performance of the Mexican automotive industry, given its importance and the implications of the pressure that President Trump would be exerting on it.
In last week’s indicators, it was reported that gross fixed investment (GFI) contracted -4.1% yoy in December, marking a fourth consecutive month of negative results. As in the previous three months, the contraction came in response to a significant drop in construction, while machinery and equipment (M&E) slowed to less than half the average increase of January-December. In tandem with the GFI, the private consumption indicator presented a negative balance in December. Its -0.8% yoy fall was the first adverse annual result since February 2021. For all of 2024, consumption increased 2.8%. Consumption of imported and domestic goods declined in December while spending on services increased moderately. And 12-month consumer inflation rebounded to 3.77% in February (up from 3.59% in January) owing to a significant rise in the non-core component.
Now read on...
Register to sample a report