Trump’s 30% Tariff threat stuns Mexico despite months of cooperation
Mexican officials were caught off guard by Donald Trump’s threat to impose a 30% tariff on Mexican goods, despite months of high-level talks, joint anti-drug efforts, and growing diplomatic cooperation along the border.
Trump released the letter on Saturday, accusing Mexico of failing to curb drug trafficking and dismantle powerful cartels. “What Mexico has done is not enough,” he wrote. “Mexico still has not stopped the Cartels.”
Its timing and tone came as a surprise. Senior Mexican officials, including the heads of the country’s security and economic teams, have visited Washington frequently recently to persuade Trump’s team that progress was being made. Mexico says they are willing to work with the US to secure the border and thwart drug trafficking.
President Claudia Sheinbaum gave a measured response, urging her government to remain calm. In a brief statement, she advised her counterparts not to overreact. However, officials within the government reportedly expressed frustration, with those involved in the negotiations feeling that their goodwill had been dismissed. They noted that, so far, their cooperative efforts had yielded little in terms of concrete assurances.
Mexico acts to defend record of drug crackdowns
So far, Mexico has responded to US concerns. It has intensified the scrutiny and dismantling of drug-trafficking operations. The government has extradited scores of high-level suspects to the US and made big seizures along the most important smuggling routes. Mexican officials say they have increased surveillance and arrests in cartel-ruled regions.
On the legislative front, the Sheinbaum government has sought to reform to strengthen investigations into organized crime and prosecute long-dragged-out cases.
Still, the president’s letter rejected Mexico’s actions as insufficient. Some analysts said Trump’s move was more about politics than economics.
Some also say that the drug problem in the United States is complicated and can’t be solved by one country alone. While Mexico’s cartels do produce and move drugs, much of that demand, and the cash and guns that fuel the killing, comes directly from the United States.
Mexico seeks fairer NAFTA deal as trade tensions escalate
Regardless of its perceived impact, analysts noted that Trump’s tariff threat was unlikely to carry the economic weight it suggested. According to Bloomberg Economics, the proposed 30% levy would primarily target goods not covered under the USMCA. In practice, they pointed out that nearly 83% of US imports from Mexico in May had already been exempt due to compliance with the trade agreement.
Yet the symbolism of the threat is potent. It stirs doubts among Mexican businesses and could make investors nervous. The rate is barely below the 35% tariff President Trump recently imposed on Canadian imports, even though Canada has been more openly confrontational with Trump, while Mexico has deprioritized speaking out.
Mexico has also come under pressure from the tariffs on specific industries such as steel and a proposed duty on copper in recent weeks. The flurry set off new discussions in Washington. Since Friday, Mr. Ebrard, the economy minister, has been meeting with the US trade representative, the Commerce Department, and the White House.
The letter already elicited reactions from the stock market. The US stock index futures fell Sunday evening as Wall Street gears up for another week of trade uncertainty, with the second quarter earnings season still picking up.
S&P 500 futures fell 0.4% and Nasdaq 100 futures fell 0.5%. Futures on the Dow Jones Industrial Average dipped 183 points, or 0.4%.
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