From Pause to Punishment: Trump’s Tariffs Hit Mexico
Just a week ago, all of Mexico was celebrating the Sheinbaum administration’s diplomatic triumph in preventing the much-threatened US tariffs from coming into force, if only for a month. Turns out, however, that we didn’t have to wait as long: yesterday, President Trump announced that, starting March 12, the US will impose a 25% tariff on steel and aluminum imports. Worryingly, he also indicated that additional tariffs on automobiles, pharmaceuticals, and computer chips were under consideration.
Once again, Trump is invoking national security concerns to justify trade measures with significant economic consequences. “These modifications are necessary to address the significantly increasing share of imports of steel articles and derivative steel articles from these sources, which threaten to impair US national security,” the president stated in the official text. During his first term, Trump imposed tariffs of 25% on aluminum and 10% on steel in 2018, granting exemptions to Canada and Mexico. This time, however, the U.S. has shown no such leniency—though a potential exception for Australia is now under consideration.
Assuming there is no retaliation by Mexico, the main loser would be Mexico’s steel industry. In 2024 Mexico exported about $2.8bn of steel products to the USA. However, Mexico imported $6.9bn of steel products from the US so actually ran a steel trade deficit. In fact, Secretary of the Economy Marcelo Ebrard stated on today’s presidential press conference that Mexico is the largest recipient of US steel, accounting for 52% of total exports. One would expect post tariffs Mexico to redirect export production to domestic use, and the US to export less, mitigating the impact of the tariff.
Mexico’s finished goods (e.g., cars) that use steel and aluminum would still enter the US tariff free if they meet the USMCA rules of origin – the tariff applies to import of steel and aluminum raw materials on a stand-alone basis. So, in the short term, if US steel prices go up, and Mexico steel prices go up by less (due to redirection of production to the domestic market, dumping in Mexico by Brazil, Korea, etc.), Mexico’s car industry competitiveness may even benefit relative to the US car industry – though this is could be complicated by the deep regional integration of the industry. Of course, if Mexico retaliates and puts tariffs on US steel, then Mexican steel prices would go up, hurting the car sector.
The big question for the government is whether to retaliate, and risk getting into a broader trade war with the US which would hurt all countries, but Mexico to a much greater degree. But doing nothing may encourage Trump to extend tariffs to other sectors. We suspect the government will wait until the 30 days on the original 25% tariff threat is over. Secretary Ebrard said he would stay in touch with his US counterparts. And even then, putting Mexican tariffs on US steel would be an own goal, given the importance of imported US steel to the Mexican car industry.
Mexico Backs Down: GM Corn Ban Overturned
Like it or not, Mexico is backing down on restrictions on imports of genetically modified (GM) corn and glyphosate use. The Ministry of the Economy has published an agreement nullifying the provision that banned GM corn for human consumption in Mexico, thereby complying with the USMCA panel ruling in the trade dispute between the Mexican government and the United States.
The panel’s December 2024 decision made it clear: Mexico’s restrictions had no solid scientific basis and violated the country’s trade commitments. The original ban, pushed by former President López Obrador as part of a nationalist food sovereignty plan to protect native corn varieties, was always a thorn in the side of producers, business leaders, and trade partners.
While President Claudia Sheinbaum stated that Mexico won’t appeal the decision, allowing GM corn imports for human consumption to resume, she’s not giving up entirely: her administration is now setting its sights on a constitutional amendment to ban the cultivation of GM corn. This will unleash a fierce (and in all likelihood lengthy) debate in Congress, with lower house majority leader Ricardo Monreal promising that “all voices will be heard”, from industry leaders, farmers, and even Energy Minister Luz Elena González Escobar.
Telecom Shake-Up: More Control, Less Competition
Morena is charging ahead with a new Federal Telecommunications and Broadcasting Law, with the goal of expanding the government’s control in (and revenue from) the sector while solidifying the Digital Transformation Agency as the new regulatory heavyweight. Officially, it’s all about modernization and fairness, but in practice, the State is very much asserting its control of the industry.
One of the most significant changes is the one that redefines “neutrality” in competition by exempting government-operated telecom providers from anti-competitive scrutiny. This would apply to entities such as CFE Telecom, Altán Redes, as well as any others the government were to create later.
Interestingly, industry players don’t seem concerned with IFT’s demise, at least for now. Speaking at a press conference yesterday, Carlos Slim argued that the soon-to-be-dissolved regulator was never truly independent: “Who did the head of the IFT answer to? Well, to the Legal Counsel of the Presidency,” Slim stated. “We don’t have good memories of [dealing with the IFT]. We accepted the regulations, the restrictions, the rules they imposed, all in the name of helping others grow,” he remarked.
Contact:
Laura Camacho
Executive Director Miranda Public Affairs
laura.camacho@miranda-partners.com
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