US President Donald Trump’s decision to impose 25% tariffs on imports from Mexico and Canada has created uncertainty in the US economy and international trade.
Andrés Franco, general director of the Mexican Business Council for Foreign Trade, Investment and Technology (Comce) Northeast , explained the immediate and long-term effects that these measures could have on both countries.
He said that during his term in office, Trump has signed 82 presidential orders , 23 of which affect foreign trade.
In this regard, since the implementation of the tariffs, there has been a drop in the US consumer confidence index , suggesting a widespread fear of the increase in the costs of essential products. Companies such as Target and Best Buy have already warned that their prices will rise due to the higher cost of imported goods from Mexico and Canada.
The executive pointed out that products such as vehicles, auto parts, avocados , among others, will be the most affected.
According to Comce Noreste, an average family in the United States could see an annual increase of up to three thousand dollars in their spending on food and appliances.
In the case of the automotive industry, a vehicle manufactured in Mexico and sold in Texas could increase its price from $36,000 to $42,000 due to the new tariffs.
“American consumers will feel these increases in their daily lives. A car assembled in Mexico could cost up to $6,000, and gasoline imported from Canada would cost between 20 and 40 cents more per gallon,” Franco explained.
He also noted that the impact on financial markets was not long in coming, with the US stock market falling by 2.4% after the tariffs came into effect.
At the border, uncertainty led companies to advance exports before the deadline , so at the Nuevo Laredo customs there were lines of up to 14 kilometers of trucks seeking to cross before the application of tariffs, however, after their implementation, many exporters suspended shipments awaiting possible changes in trade policy.
“We saw lines of up to 14 kilometers at the Nuevo Laredo customs in the previous weeks, with companies trying to get ahead of the tariffs coming into effect. Yesterday, after the announcement, many suspended exports awaiting clarity on the measure,” Franco explained.
Example of an affected import
To better understand the impact of tariffs, Armando Guerra, director of Commercial Intelligence, presented a practical case on the import of computers from Mexico to the United States.
Assuming that a Mexican company sends a truck full of computers with an invoice value of $100,000 to Houston, Texas , the cost of transportation and insurance to customs in Laredo, Texas, is $5,000, and the cost from Laredo to Houston is $3,000.
Prior to the imposition of tariffs, these computers entered the country without paying taxes thanks to the United States-Mexico-Canada Agreement (T-MEC), however, with Trump’s new executive order, the tariff is calculated on the customs value (that is, the value of the merchandise plus the transportation costs to customs).
“The 25% tariff is calculated on 105 thousand dollars (100 thousand of invoice value plus five thousand of transport to customs), which is equivalent to an additional payment of 26 thousand 250 dollars,” explained Guerra.
In some cases, if the merchandise contains inputs originating in the United States, these may be excluded from the calculation of the tariff.
For example, if $20,000 of the $100,000 corresponds to components manufactured in the neighboring country, the tax would apply only to the remaining $80,000, however, this requires additional procedures to prove the origin of the inputs.
“This increase directly affects Mexico’s competitiveness, since other countries such as Korea or Japan will continue to export computers to the United States without tariffs, which could displace Mexican companies from the market,” Guerra warned.
Strategies and alternatives for Mexico
Faced with this situation, businessmen and analysts have begun to explore strategies to mitigate the impact. One option is lobbying with the most affected states , mainly Texas, which receives 30% of Mexican imports.
“It is not just a commercial issue, but a political one. The strategy will be to work with the Republican states most affected so that they themselves exert pressure in Washington. If the American consumer begins to feel the effects, there may be changes in the tariff policy,” Franco explained.
Another alternative is to diversify markets .
Currently, 83% of Mexican exports are destined for the United States, making Mexico highly vulnerable to this type of measures, but the country has 14 free trade agreements with 50 nations, which opens the possibility of expanding exports to other markets, such as Europe and South America.
“Mexican companies are already exporting to more than 15 or 20 countries in Latin America and Europe. With the right analysis, we can identify which countries have specific demand for our products and develop new commercial strategies,” Guerra said.
Meanwhile, the Mexican export sector remains on alert, monitoring the evolution of the trade balance and the impact on supply chains.
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