On February 1, 2025, President Donald Trump signed an executive order imposing a 25% tariff on all imports from Mexico, citing concerns over illegal immigration and drug trafficking. These tariffs were scheduled to take effect on February 4, 2025.
In retaliation, Mexican President Claudia Sheinbaum announced that Mexico will implement both tariff and non-tariff measures against the United States. While specific targets have not been detailed, potential areas for retaliation may include U.S. agricultural products, steel, and aluminum.
As of February 3, 2025, the United States and Mexico have negotiated a one-month delay in the implementation of these tariffs. During this period, both nations have agreed to continue discussions on security and trade issues, which are the main concerns for each country.
The initial agreements between President Sheinbaum and President Trump are the following:
- Mexico will reinforce the northern border with 10,000 soldiers from the National Guard immediately to prevent drug trafficking from Mexico to the United States, particularly fentanyl; and
- The United States is committed to preventing the trafficking of high-powered weapons into Mexico.
Implications for Businesses
Companies engaged in cross-border trade between the U.S. and Mexico should prepare for potential disruptions. Key considerations include:
- Supply Chain Management: Assess and adjust supply chains to mitigate potential delays or increased costs resulting from tariffs.
- Contractual Obligations: Review existing contracts for clauses related to tariffs, duties, or force majeure that may be invoked due to these developments.
- Regulatory Compliance: Stay informed about changes in trade regulations and ensure compliance with both U.S. and Mexican laws.
- Strategic Planning: Consider diversifying sourcing and markets to reduce reliance on cross-border trade that may be affected by tariffs.
The Mexican Association of Freight Forwarders (AMACARGA) estimates that Mexico’s tariff and non-tariff response will cause negative effects in the United States, as 1.7 million jobs could be lost in the U.S.
The measures taken by the Government of President Sheinbaum will likely negatively impact ten states in the northern neighbor, highlighting:
- Monitor Developments: Keep abreast of ongoing negotiations and policy changes between the U.S. and Mexico.
- Engage Stakeholders: Communicate with suppliers, customers, and partners to manage expectations and plan for potential impacts.
- Consult Legal Counsel: Seek advice to navigate the evolving legal landscape and to develop strategies for mitigating risks associated with the tariffs.
Conclusion
The situation remains fluid, and businesses should remain vigilant. Proactive planning and consultation with legal and trade experts are essential to navigate the complexities arising from these trade developments.
