The return of Donald Trump to the presidency of the United States has marked the beginning of a stage filled with controversial decisions that will change the political and commercial landscape. On his first day in office, Trump signed several executive orders and announced a series of measures aimed at reversing the policies of his predecessor, Joe Biden, and reinforcing his “America first” stance.
Among the most controversial initiatives are the potential 25% tariffs on imports from Mexico and Canada, as well as the reinstatement of strict immigration policies, which could further strain relations between neighboring countries.
These decisions have raised concerns in both financial markets and North American commercial sectors, particularly in Mexico, where the peso suffered an immediate depreciation against the dollar.
What tariffs does Trump plan to impose on Mexico and Canada?
In a conference from the Oval Office, Donald Trump announced his intention to impose 25% tariffs on imports from Mexico and Canada, stating that these nations “allow the entry of drugs and migrants” into the United States.
“We are thinking of 25% for Mexico and Canada because they are allowing a large number of people to enter,” Trump declared, adding that the tentative date for implementing this measure would be February 1.
The president directly linked the imposition of these tariffs to the fentanyl crisis, a central theme in his speech, emphasizing that this action is a response to what he considers a lack of border control by his neighbors.
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What are Donald Trump’s tariffs, and how will they impact Mexico?
The United States-Mexico-Canada Agreement (USMCA) regulates an annual trade of $1.8 trillion in goods and services, according to 2022 data.
The imposition of these tariffs threatens to destabilize this agreement, renegotiated by Trump during his first term. Key sectors such as automotive and energy could face severe consequences, as Mexico and Canada are crucial trade partners for the U.S. economy.
The threat of tariffs is not new. For months, Trump has been warning about their implementation, to which both Mexico and Canada have stated they will retaliate. This potential trade war would generate market uncertainty and could affect the economic growth of all three countries.
During the same conference, Trump mentioned considering the implementation of a “universal tariff” on all imports into the United States. Although he acknowledged that this measure is not yet ready, he stated that its implementation could be swift. “You would put a universal tariff on anyone doing business in the United States because they are coming in and stealing our wealth,” he commented.
If implemented, this measure could severely disrupt global supply chains and trigger retaliation from key trading partners, including China and the European Union.
What is a tariff?
A tariff is a tax applied to imported goods at the time they enter a country. This tax increases the price of foreign products, encouraging the consumption of domestic goods and protecting local industries from external competition. However, this type of policy comes at a cost: consumers pay more for goods, and sectors reliant on imported inputs face higher production costs.
How did the Mexican peso react to the announcement?
The Mexican currency suffered an immediate depreciation following Trump’s statements. During electronic trading, the peso dropped 1.35%, trading at 20.7952 pesos per dollar, according to the Bank of Mexico. Financial analysts warn that volatility could continue if the president’s rhetoric turns into concrete actions.
“As long as the price remains above 20.54 per dollar, we expect it to reach 20.93 in the short term, and we do not rule out that it could touch 21 pesos in the coming days,” commented Enrique Bazaldúa, a currency expert, to Reuters.
What other measures announced by Donald Trump affect Mexico?
In addition to tariffs, Trump declared a national emergency at the southern border to unlock federal funds to intensify the construction of the border wall.
He also reinstated the policy known as “Remain in Mexico”, which requires asylum seekers to wait in Mexican territory while their cases are reviewed by a U.S. immigration judge.
Another measure impacting Mexico is the designation of drug cartels as foreign terrorist organizations, opening the door for more aggressive U.S. interventions in Mexican territory.
Cartels as terrorist organizations, what does it imply?
The designation of cartels as foreign terrorist organizations (FTO) represents a radical shift in the U.S. strategy to combat organized crime. According to Donald Trump, cartels operate as “quasi-governmental entities” in certain regions of Mexico, controlling illegal activities through extreme violence that threatens both U.S. internal security and the stability of the Western Hemisphere.
This decision enables the U.S. government to use specific legal tools, such as the Enemy Expatriation Act, to intensify efforts against these groups. It also allows for economic sanctions and criminalization of material support to these organizations.
Experts suggest this decision could reinforce the perception that Mexico lacks the capacity to effectively combat drug trafficking, increasing international pressure on the country. Some analysts even warn that this designation could be interpreted as a signal to justify future military interventions in Mexican territory, although the order does not officially authorize the direct use of armed forces.
Finally, this declaration also has financial implications. Assets linked to these organizations could be frozen, and efforts to trace and block illicit money flows supporting their operations would intensify. Additionally, classifying cartels as terrorists expands the U.S. government’s ability to pursue individuals and entities collaborating with them, both within and beyond its borders. While some sectors consider this measure necessary to address the fentanyl crisis and other threats, it also raises concerns about potential abuses, negative impacts on civilians, and diplomatic tensions with Mexico.
What other decisions has Trump made upon returning to the White House?
The president signed a package of executive orders covering topics as diverse as trade, energy, and immigration. Among the most notable are:
- Investigation of trade practices: Trump ordered a review of trade deficits and unfair practices by countries such as Mexico, Canada, and China, which could lead to new tariff barriers.
- Ban on Diversity, Equity, and Inclusion (DEI) programs: He eliminated initiatives focused on promoting equity in the federal government.
- Withdrawal from the Paris Agreement: Reiterating his skepticism about climate change, Trump ordered the immediate withdrawal of the United States from this international pact.
- Suspension of refugee programs: He indefinitely halted the entry of refugees into the country.
