Tariff Tensions: Trump's Trade Threat Looms Large

Financial analysts react to U.S. President-elect Trump's threat of 25% tariffs on Mexico and Canada, potentially igniting a trade war. Trump's strategy targets major trade partners, with analysts anticipating significant impacts on Mexican equities and trade dynamics, while some view it as a negotiating tactic.

Financial analysts voiced concerns on Tuesday following President-elect Donald Trump's announcement of imposing 25% tariffs on top trade partners Mexico and Canada, a move that could spark a trade war as he prepares to take office again in January.

As of September, Mexico stands as the leading trade partner of the U.S. with 15.8%, followed by Canada at 13.9%. Trump's threat also includes a potential 10% tariff on imports from China, the third-largest trade partner at 11.9%.

Giulia Bellicoso of Capital Economics warns that these tariffs might hinder Mexican equities by curbing investment and optimism concerning near-shoring. CIBanco suggests Trump's tariff announcement might be a negotiation tactic, considering the detrimental impact on the U.S. economy. The USMCA's review in 2026 could further exacerbate risks for Mexico's export sector, raising fears of a more radical approach in Trump's second term, as per Banco BASE and AllianceBernstein.