Economics: Data through May shows tariffs are hurting the trade performance of Mexico's major exporting sectors to the US but also have led to a drop in US exports to Mexico
On July 12, President Trump issued his latest tariff threat against Mexico, consisting of a 30% across-the-board tariff starting August 1, due to what he considers insufficient efforts by the Mexican government to stop fentanyl trafficking and the steep trade deficit that the US maintains with Mexico, based on 2024 figures. In terms of the impact on Mexico, this threat continues an active process of other threats, as well as the implementation, pause, and modification of both generalized and sector-specific tariffs that have generated high uncertainty as well as incentives to pause business investment.
An analysis of the evolution of Mexico's exports to the US shows that both the automotive, and steel and aluminum sectors have been impacted by the tariffs, with a significant reduction in export value. However, the US has also seen declines in its exports to Mexico and to countries with which it has significant trade relations, a clear sign that there are trade complementarities that ultimately affect the country imposing the tariff, rather than strengthening its production and export capacity. This week’s Economic Outlook analyzes the recent performance of US trade with Mexico and selected countries, as well as specific productive sectors, in the context of the implementation of tariffs and the uncertainty associated with them.
As for indicators released last week, it was reported that during May, the number of people employed in manufacturing fell by -2.0% year on year. So far in 2025 (January-May), employment in manufacturing has fallen by 1.3% year on year.
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