Although President Donald Trump said that on February 1 he could announce 25% tariffs on imports from Mexico and Canada, it is unlikely that he will do so since it would generate strong inflationary pressures, which would make it difficult to continue lowering the interest rate and could even rise, warned the Base Financial Group.
“I don’t really think Trump is going to impose a general 25% tariff for several reasons, starting because in the United States it would generate brutal inflationary pressures. Trump is a businessman and he is not stupid, and he also knows that this tariff could generate disruptions in his supply chains,” said the firm’s director of economic-financial analysis, Gabriela Siller.
“Increased costs, increased prices, increased inflation and the Federal Reserve being unable to continue cutting the interest rate and may even have to increase it; In addition, there are products that cross the border between Mexico and the United States several times, the logistics for collecting this tariff would be very complicated, if not impossible,” he added.
Given this scenario, the board indicated, it is most likely that Donald Trump wants to impose a tariff on specific products and, probably, of the order of 5% that could gradually rise if he does not achieve his objectives of stopping the migration of undocumented people and the introduction of illicit substances into the United States.
However, he pointed out, if the 25% tariff were to be imposed, because there is always a certain possibility of “madness”, it would be equivalent to the United States leaving the USMCA, Mexican exports would decrease, there would be a severe recession in Mexico, a fall in the gross domestic product (GDP) from which it would not be easy to recover, in addition to the fact that the exchange rate would rise to historical maximum levels.
However, Siller clarified, the United States would also be seriously affected, so if it were to impose that “chaotic” 25% tariff, “I think it would not go beyond a month,” he estimated.
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