Mexico hints at retaliation after Trump threatens steep tariffs

President Claudia Sheinbaum suggested Mexico could respond to Donald Trump’s threatened tariffs with levies of its own, warning the economic consequences would be dire.

Sheinbaum, reading aloud Tuesday from a letter she intends to send to the U.S. president-elect after he vowed to slap 25% tariffs on all goods from Mexico and Canada, said cooperation would be a better way to curb the flow of migrants and illegal drugs.

“One tariff will be followed by another in response, and so on until we put common companies at risk,” Sheinbaum said at her daily media conference in Mexico City. “The main exporters from Mexico to the U.S. are General Motors, Stellantis, and Ford Motor Company, which arrived 80 years ago. Why put in place a tariff that puts them in risk?”

Mexico’s auto sector is particularly exposed to a trade conflict with the incoming administration in Washington, along with factories that export electronics, plastics and other manufactured goods to US consumers. The Latin American nation became the largest U.S. trading partner as China’s import share declined in recent years, with the Mexican government estimating there’s now $800 billion annually in total trade between the neighboring countries.

Sheinbaum said her letter calls for joint discussions on the migration and fentanyl issues Trump cited in his threat, adding that she hoped her team and his would meet soon.

The Mexican peso slumped 2% in the wake of Trump’s tariff threat after closing in New York on Tuesday, lagging most emerging-market currencies.