MEXICO CITY: Mexico’s president discussed migration and drug trafficking with US President-elect Donald Trump on Wednesday — two issues he had raised as justification for raising import tariffs on America’s southern neighbor.
Claudia Sheinbaum said she had had “an excellent conversation” with Trump, just hours after her economy minister warned that the cost to US companies of Trump’s tariffs would be “huge.”
“We discussed Mexico’s strategy regarding the phenomenon of migration,” Sheinbaum said on X, adding she had told Trump that caravans of migrants “are not arriving at the northern border because they are being attended to in Mexico.”

Earlier on Wednesday, Sheinbaum said  Mexico would retaliate if US President-elect Donald Trump followed through with his proposed 25 percent across-the-board tariff, a move her government warned could kill 400,000 US jobs and drive up prices for US consumers.
“If there are US tariffs, Mexico would also raise tariffs,” Sheinbaum said during a press conference, in her clearest statement yet that the country was preparing possible retaliatory trade measures against its top trade partner.

Mexican Economy Minister Marcelo Ebrard, speaking alongside Sheinbaum, called for more regional cooperation and integration instead of a war of retaliatory import taxes.
“It’s a shot in the foot,” Ebrard said of Trump’s proposed tariffs, which appear to violate the USMCA trade deal between Mexico, Canada and the US.

Discussion with Trump

In her talks with Trump later, she said they discussed “strengthening collaboration on security issues” as well as “the campaign we are conducting in the country to prevent the consumption of fentanyl.”
Trump on Monday said he would impose tariffs of 25 percent on Mexican and Canadian imports and 10 percent on goods from China.
“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Trump wrote on his Truth Social page.
The Republican, who won an election in which illegal migration was a top issue, has vowed to declare a national emergency on border security and use the US military to carry out a mass deportation of undocumented migrants.
Mexican Economy Minister Marcelo Ebrard said Wednesday some “400,000 jobs will be lost” in the United States if Trump followed through on his threat. He cited a study based on figures from US carmakers that manufacture in Mexico.

Tariff impact

Ebrard said the tariffs would also hit US consumers hard, citing the US market for pickup trucks — most of which are manufactured in Mexico. The tariffs, the minister said, would add $3,000 to the cost of a new vehicle.
“The impact of this measure will chiefly be felt by consumers in the United States... That is why we say that it would be a shot in the foot,” Ebrard told reporters, speaking alongside Sheinbaum at her regular morning conference.

The proposed tariffs would hit the automotive sector’s top cross-border exporters especially hard, Ebrard added, namely Ford, General Motors and Stellantis.
Ebrard noted that 88 percent of pickup trucks sold in the US are made in Mexico and would see a price increase. These vehicles are popular in rural areas that overwhelmingly voted for Trump.
Mexico and China have been particularly vociferous in their opposition to Trump’s threats of a trade war from day one of his second presidential term, which begins on January 20.
Sheinbaum has declared the threats “unacceptable” and pointed out that Mexico’s drug cartels exist mainly to serve drug use in the United States.
China has warned that “no one will win a trade war.”
During his first term as president, Trump launched full-blown trade hostilities with Beijing, imposing significant tariffs on hundreds of billions of dollars of Chinese goods.
China responded with retaliatory tariffs on American products, particularly affecting US farmers.
The United States, Mexico and Canada are tied to a three-decade-old largely duty-free trade agreement, called the USMCA, that was renegotiated under Trump after he complained that US businesses, especially automakers, were losing out.

Many analysts regard Trump’s tariff threats as more of a negotiating tactic than trade policy.
“The lack of a clear link between this threat and questions related to trade suggests the new president plans to use tariffs as a negotiating strategy to achieve goals largely unrelated to trade,” said David Kohl, chief economist at Julius Baer.

Profit wiped out
Mexico’s automotive industry is the country’s most important manufacturing sector, exporting predominantly to the United States. It represents nearly 25 percent of all North American vehicle production.
Analysts at Barclays said they estimate the proposed tariffs “could wipe out effectively all profits” from the Detroit Three automakers.
“While it’s generally understood that a blanket 25 percent tariff on any vehicles or content from Mexico or Canada could be disruptive, investors under-appreciate how disruptive this could be,” they wrote in a note on Tuesday.
Brian Hughes, a spokesperson for Trump’s transition team, said the tariffs would protect US manufacturers and workers from “unfair practices of foreign companies and foreign markets.”
Hughes said Trump would implement policies to make life affordable and more prosperous for his country.
GM and Stellantis declined to comment. Ford did not comment on how the threatened tariffs would affect its business but said it manufactures more vehicles in the United States than most major automakers.
Mexico’s automotive industry group AMIA said it would prepare for any possibility and wait to see what formal actions are taken.
The Institute of International Finance, a trade group for the global financial services industry, warned Mexico-US relations would be challenging going forward.
“The imposition of tariffs, eventually leading to increased protectionism, and other policies affecting exchange rates and commodity prices could have significant implications for the region,” it said in a note.
The USMCA is up for review in 2026.
Katia Goya, director of international economics at Grupo Financiero Banorte, said it was likely the three USMCA countries would seek wholesale renegotiation of the pact rather than just rubber-stamp it to continue in its current form.
“The effect of a trade-conflict situation is that it will mean lower economic growth in the United States, higher unemployment and higher inflation,” Goya said.
Ebrard said USMCA trade amounted to $1.78 trillion in the first nine months of this year.
“We can fragment and divide with tariffs,” Ebrard said. “Mexico does not want conflicts and divisions, but to build a stronger region.”