 "US President Donald Trump. File Image/ Reuters")
Mexico has enough resources to absorb financial shocks and navigate global challenges after the United States announced 25% tariffs on its goods, Finance Minister Rogelio Ramirez de la O said on Monday.
Ramirez de la O, speaking to investors earlier in the day, aimed to ease market jitters saying that Mexico was not only resilient but also remained a strategic and trustworthy destination for investors.
Ramirez de la O said Mexico’s flexible exchange rate was the cornerstone of the country’s macroeconomic framework.
Global financial markets took a hit on Monday following the imposition of tariffs by U.S. President Donald Trump on Canada, Mexico, and China. World leaders braced for possible retaliatory measures, with the European Union potentially being the next to respond.
The Mexican peso dropped by approximately 1.57% against the dollar, trading at 21.0260.
Trump announced that he would engage in talks with Canada and Mexico regarding the 25% tariffs he had imposed, which had already sent global markets into a downward spiral. Fears about the broader economic impact led to declines in European and Asian stock markets as they opened on Monday, with investor sentiment shaken by the uncertain global repercussions.
The Mexican peso and Canadian dollar also sank against the greenback, while oil jumped despite Trump placing the levy on Canada’s energy imports at 10 percent to limit a spike in fuel prices.
China, Mexico and Canada are the top three US trade partners and have all vowed to retaliate when the tariffs take effect Tuesday.
Trump, a fervent supporter of tariffs, had always maintained that their impact would be borne by foreign exporters without being passed on to American consumers, contradicting the opinion of a broad range of experts.
However, the Republican acknowledged Sunday that Americans might feel economic “pain”.
“But we will Make America Great Again, and it will all be worth the price that must be paid,” Trump wrote in all-caps on his Truth Social media platform.
Analysts expect the trade war to slow US growth and increase prices – at least in the short term – something the president had resisted acknowledging, with frustration over rising costs seen as a major factor in his 2024 election win.
The tariffs “will immediately weigh on the US growth outlook… and prevent the US dollar from fully benefiting from Trump’s America First Policies,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“Instead, the US could end up in a less appetizing America Alone setting.”
John Plassard, investment specialist at Swiss asset manager Mirabaud, said: “Investors fear that this trade war will result in a significant deterioration in the global economy.”
Trump has cited illegal immigration and the trafficking of the deadly opioid fentanyl as reasons for the “emergency” measures.
But he also expressed general outrage on Sunday at trade deficits, which he has long viewed as signs of unfair treatment against the United States.
“We’re not going to be the ‘Stupid Country’ any longer,” he said.
With inputs from agencies.