On Thursday morning, President Claudia Sheinbaum of Mexico plans to speak with President Trump, in a last-ditch attempt to avert the 25 percent tariffs that Mr. Trump imposed this week on her country’s exports, which would devastate its economy.
But already, Mexico is bracing for impact.
The tariffs, according to banks and business leaders, are likely to cause American companies that make products in Mexico to leave the country, in line with Mr. Trump’s stated goal of pressuring those manufacturers to relocate to the United States. That could lead to the loss of tens of thousands of Mexican jobs, and a contraction of the gross domestic product of more than 2 percent.
By Wednesday, Ms. Sheinbaum seemed to have recovered from the shock that Mr. Trump was imposing tariffs, which Mexican officials, just days earlier, had appeared confident they could head off in negotiations with the Trump administration. She had shifted into crisis mode, calling this a “definitive moment” for the country and drawing a comparison to the devastating Covid-19 pandemic.
Yes, Ms. Sheinbaum acknowledged, pain would come: Around 80 percent of Mexico’s exports go to the United States. But Mexico had withstood worse. The peso dipped on Tuesday, the day the tariffs took effect, but not nearly as much as it had during the pandemic, she said.
She called for patience, suggesting that things could still change, and struck a defiant tone, saying that Mexico was not about to take tariffs lying down.
“Mexicans are brave and resilient — the people of Mexico are strong, and our economy is doing well,” she said, adding that “there will be no submission.” If need be, she said, Mexico will build its trading relationships with “Canada and other countries” to compensate for a loss of U.S. business.
Ms. Sheinbaum assured the public there would be a response from her government this weekend, something she described as a matter of “dignity.”
“We have our plan, which we’ll announce on Sunday,” she said.
In the meantime, many Mexican businesses say they are taking their cues from their president and sitting tight, despite the seriousness of what could be in store.
“At this point, there are no immediate reactions from exporters,” said Miguel Muñoz, the director for Mexico at Geodis, a global logistics company, who said he had spoken both to customers and to Mexican chambers of commerce. “They’re waiting to see what the government is going to do.”
He said that exporters were not making big moves yet, including his customers in the retail industry. They were further encouraged by Wednesday’s announcement that the Trump administration would exempt automakers from the tariffs for a month, and U.S. Commerce Secretary Howard Lutnick’s suggestion earlier this week that Mr. Trump’s tariff plans for Mexico and Canada could still shift, he said.
“It’s business as usual, honestly — considering it’s going to be delayed a month, what’s to say it’s not going to be delayed six months or more?” he said. “At least for this week, exporters will act as if it’s business as usual, whatever it takes. After next week, they’ll figure out what to do.”
Ms. Sheinbaum’s comments on Wednesday, however, suggested that she was preparing for the worst. Whatever her government’s plan, a trade war is likely to hurt the Mexican economy much more than that of the United States.
And while some have opted for calm and caution, others have sprung into action. Government officials and business leaders are working together to find ways to adjust, and to tap into alternative markets.
“Of course, this took us by surprise and it was not what we hoped for, but the key word here is adaptation,” said Antonio Hernández, director of economic development in the city of Torreón, around 300 miles south of Laredo, Texas. “We have to move beyond the tragedy and into action.”
That has meant “knocking on doors” in the European Union with virtual meetings, and starting to plan trips to countries like Hungary and Japan to discuss commercial partnerships, Mr. Hernández said. But there are big obstacles to exporting to two of the world’s biggest markets, the European Union and China, experts say, including the difficulty of transporting agricultural goods with short shelf lives and European controls on importing food.
Business leaders are also looking closer to home, Mr. Hernández said, focusing on Mexico’s domestic market as well as other markets in the Americas.
Ms. Sheinbaum said on Wednesday that she had already spoken with President Gabriel Boric of Chile and that her government was open to forging other commercial partnerships.
Although local officials and business leaders have already started to scramble for ways to face the new commercial landscape, Mr. Hernandez said that until they knew more about what Mr. Trump and Ms. Sheinbaum will do, they would not know “what the rules of the game will be.”
Despite its temporary reprieve, the automotive industry warned on Wednesday that Mr. Trump’s tariffs threatened to destabilize the highly integrated supply chains between Mexico, the United States and Canada.
“The tariffs will have severe repercussions in the region generating inflation, loss of jobs and lower growth for the three countries,” the Mexican Automotive Industry Association and the National Auto Parts Industry said in joint statement with other associations.
Already this week, the flow of goods heading north to the United States has considerably slowed down, and U.S. companies have talked of pulling their operations out of Mexico.
A sharp, lasting drop in the peso against the dollar could be disastrous. In the mid-1990s, devaluation of the peso led to a major recession that prompted millions of Mexicans to migrate to the United States.
Ms. Sheinbaum’s approval ratings have recently soared above 80 percent, in large part because of what many see as her poised and firm approach to negotiating with Mr. Trump, as well as her actions on other high priorities, like cracking down on drug-trafficking cartels.
The government has also called a rally on Sunday in Mexico City, a sign that the country’s leadership is focused on national solidarity as well as on crafting an economic response.
“It’s important to explain that this decision is being taken unilaterally by the U.S. government,” Ms. Sheinbaum said of the rally.
Mr. Muñoz, the Geodis Mexico director, said it was too soon to know the impact that tariffs would have on Mexico. Some businesses are responding, but many others, he said, were taking a wait-and-see approach for now.
“What the chambers of commerce are applauding is the way the president has handled this,” he said. “They’re not moving a finger yet.”
“They’re waiting, they’re standing by to see what will be the Mexican government’s strategy on this. They’re waiting for President Sheinbaum’s message.”
