Negotiation by Force: Trump Slaps Tariffs, Calls It Security
President Donald Trump finally made good on his threat to slap a 25% tariff on imports from Canada and Mexico, declaring that time for negotiation had officially run out. It’s impossible to say for how long they’ll run, but until they are lifted, there is little doubt they will cause weaker growth, higher inflation and job losses in all three countries, but perhaps especially in Mexico, the most economically vulnerable of the three countries. And with the tariff genie out of the bottle, and North American supply chains no longer mostly frictionless, investment in nearshoring in Mexico will suffer a serious blow, even if Trump back down later on.
Mexico and Canada now find themselves in an unprecedented position. Trump 47 has proven he is willing to use economic pressure as a weapon to a far great extent Trump 45 did. Do they respond aggressively with their own tariffs, hoping to force Trump to back down by wreaking more havoc on the US economy? Or do they forsake confrontation, hoping to convince Trump to back down with charm and cooperation?
On Wednesday morning, Claudia Sheinbaum seemed to be looking for a middle ground. She said she would announce counter-measures in a public rally on Sunday, tariffs and non-tariffs, perhaps hoping that by then Trump will reach a deal with Mexico. She emphasized that this decision is not intended to create an economic or trade confrontation but rather to promote greater integration between both economies to strengthen the region against global competition. However, she deemed it inconceivable to ignore the harm this measure will cause to U.S. citizens and businesses, as it will lead to higher prices for products manufactured in Mexico and slow job creation in both countries.
These tariffs are being justified by an “extraordinary threat” to U.S. national security under the International Emergency Economic Powers Act (IEEPA). In Mexico’s case, the alleged threat comes from unchecked cartel activity, and the White House accusation that the government is complicit in the fentanyl trade. In Trump’s view, Mexico has done too little to stop the flood of fentanyl into the U.S., enabling an epidemic that has cost thousands of lives. With 97% of fentanyl seizures happening at the U.S.-Mexico border, Washington is making it clear: this is Mexico’s mess to clean up.
But while that is the legal pretext, it obscures the main question Mexico is asking this morning. Is Trump hell bent on implementing his America First agenda whatever the cost, thus tearing up USMCA, and Mexico can do nothing about it? Or as almost everyone in Mexico hopes, and most people still think, is he negotiating for as yet unclear concessions on drugs, immigration and security, and is willing to drop tariffs when he has obtained his pound of flesh? The answer to that question will play a large part in determining whether Mexico will avoid a major economic downturn in 2025 and thereafter.
Extradition of 29 Drug Kingpins Was Not Enough to Placate Trump
Mexico carried out an unprecedented operation last week, extraditing 29 high-profile alleged drug lords to the United States in the most significant transfer of cartel leaders in history. While framed as a bold move in security cooperation, the timing suggests a clear strategic motive—easing pressure from Washington and buying time to demonstrate Mexico’s commitment to fight the cartels.
Among the extradited figures was Rafael Caro Quintero, the infamous founder of the Guadalajara Cartel and a longtime DEA target linked to the 1985 murder of agent Kiki Camarena. His extradition marks the end of a nearly 40-year manhunt. Other major figures included Vicente Carrillo, aka “El Viceroy,” and Miguel Ángel Treviño, “Z-40”.
While President Sheinbaum and her security cabinet certainly hoped this move would delay or soften Trump’s actions, the gambit was ultimately unsuccessful, with just a half-hearted nod from Secretary of State Marco Rubio. The message was clear: the U.S. wants more. Trump’s team is drawing comparisons to Colombia’s Proceso 8000—an explosive investigation that exposed deep narco-political ties. Whether Sheinbaum is willing to take Mexico down the same path remains to be seen.
Nepotism Is Bad… But Let’s Keep It Until 2030
Mexico’s ruling party, Morena, has begrudgingly moved forward President Sheinbaum’s proposal to ban nepotism and re-election—but not without putting a fight. While the vast majority of reforms submitted over the previous months were approved without changes (“don’t even move a comma”, AMLO famously demanded), this time Congress found it necessary to attach a delay, conveniently pushing the reform implementation to 2030, thus allowing relatives of sitting governors to run in 2027, notably PVEM Senator Ruth González Silva, wife of San Luis Potosí Governor Ricardo Gallardo, as well as Senators Félix Salgado Macedonio in Guerrero and Saúl Monreal in Zacatecas.
Luisa María Alcalde, Morena’s chairwoman, proudly announced the “anti-nepotism and anti-re-election” measures, starting with pilot programs in Durango and Veracruz. However, the long timeline undermines the supposed urgency of these reforms. If nepotism is such a problem, why wait years to fix it? Moreover, Congressional resistance to the issue exposes internal fractures within Morena, suggesting not everyone is on board – and they’re willing to publicly embarrass Sheinbaum.
From Promises to Indicators: Mexico’s New Approach to Development
The National Development Plan (PND) 2025-2030 has arrived. Unlike the politically charged, indicator-light version López Obrador presented six years ago, President Claudia Sheinbaum’s proposal sticks to the fundamentals of governance.
While some may dismiss this as bureaucratic routine, Mexico has often treated long-term planning as a mix of wishful thinking and campaign promises. The last PND was filled with grand but immeasurable claims, such as “eradicating extreme poverty”. The sentiment was positive, but without clear benchmarks, it was impossible to assess whether anything had been accomplished. This time, at least, there’s an effort to define success in a way that can be measured.
The real challenge, of course, will be in execution, where previous grandiose plans have infamously fallen short. For now, Sheinbaum’s move to embrace data-driven governance is an interesting and much welcome shift.
Contact:
Laura Camacho
Executive Director Miranda Public Affairs
laura.camacho@miranda-partners.com
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