The Economic Commission for Latin America and the Caribbean (ECLAC) estimated that if Donald Trump’s government imposes 10% tariffs on Mexican imports, both exports and investment would be affected and would lead to the growth of the Domestic Product. Gross Domestic Product (GDP) of Mexico is lower between 0.8 and one percentage point.
If we take into consideration that ECLAC’s latest projections suggest that in 2025 Mexico’s GDP will grow 1.2%, with tariffs of only 10%, and not 25% as President-elect Donald Trump has commented, GDP will increase only 0.2%.
“Mexico is possibly the most vulnerable country (in Latin America and the Caribbean) because 84% of its exports of goods go to the United States and there is a very high degree of integration of its supply chains, of its productive structures,” he noted. the executive secretary of ECLAC, José Manuel Salazar-Xirinachs.
“There are estimates that if, indeed, President Trump were to implement a tariff, let alone 25%, 10%, Mexican exports and investment would be affected, leading to GDP growth that would be between 0.8 and a percentage point lower than in a scenario without those 10% tariffs, he warned.
At a press conference, on the occasion of the presentation of the report “Preliminary Balance of the Economies of Latin America and the Caribbean 2024”, the head of ECLAC specified that, naturally, if the tariff becomes higher, the impact on Mexico would be elderly.
In Central America, he added, the countries also have the United States as the main destination for their exports and are vulnerable to trade restrictions, but also to remittances from migrants who reside in the American Union and who are a very important source for the consumption of the homes.
“Countries like Nicaragua, Salvador, Honduras, receive more than 20% of GDP in remittances and if the new administration (of the United States) carries out mass deportations, as it has announced, this will impact these flows, although this will depend on what type of preparation or prior negotiation is carried out on these measures; that is, the details of how they are applied,” said the executive secretary of ECLAC.
He added that another important factor is that the measures announced by the president-elect of the United States could be inflationary for the North American economy itself and with inflationary irradiation effects in other countries.
“For example, tariffs on imports, as well as the deportation program, would reduce the labor supply and, in that sense, can raise wages in occupations. It is estimated that around 1.3% of the United States population is made up of illegal migrants,” said José Manuel Salazar-Xirinachs.
In addition, he added that if inflation picks up, it is expected that the Federal Reserve will be forced to reverse the process of lowering interest rates that began in September or, at least, to make it slower and this would have effects on the markets. global financial institutions and, therefore, also in Latin America and the Caribbean.
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