Only a few days ago the president of Mexico, Claudia Sheinbaum, was questioning with some skepticism whether or not Donald Trump would actually follow through on his threats of 25% tariffs on most Mexican-made goods. "We don't think it's going to happen," Sheinbaum said at her regular morning press conference. "And if it does happen, we also have our plan."
As of the 1st of February it appears that her doubts have been put to rest. Donald Trump has reiterated that he is going to stick to his tariff plan and that it will not be incremental. Around 80% of all Mexican exports go to the US, which means that the majority of their manufacturing base will be immediately hit with a drop in US retail demand. Mexican business leaders say this will trigger a number of bankruptcies and higher unemployment in border cities.
Sheinbam claims in a recent press conference that she has a 'Plan A, Plan B and Plan C' in the face of high tariffs, but what does she really mean? What would Mexico's response be, specifically?
First and foremost, Sheinbaum has threatened retaliatory tariffs on US exports to Mexico, her "Plan A". Around 15% of US exports end up south of the border, however, Mexico is far more export dependent than the US. Only 10% of the US economy is based on exports while 43% of Mexico's economy relies on exports according to the World Bank. In other words, tariffs will hurt them a lot more than they'll hurt America.
Like most establishment media economists, Mexico also argues that the US consumer will have to eat the inflation in prices that comes with tariffs. This is assuming, though, that there are no alternatives to the Mexican goods being imported. Car parts, electrical equipment, oil and gas, fruits and vegetables are a few of the biggest markets for Mexican goods. The US produces close to 90% of the food that Americans purchase and Trump has indicated that energy may be exempt from tariffs.
The Mexican President's Plan B and Plan C are not so clear. It is likely that Sheinbaum will seek aid from other Latin American governments, either to establish economic agreements to help lessen the pain of US tariffs, or as a means to put pressure on Trump through organized geopolitical sparring. Most of these countries also have favorable trade imbalances with the US and none of them hold much international weight.
The real leverage that Mexico has in harming the US is through mass immigration, which siphons hundreds of billions in taxpayer dollars, untold billions in untaxed wages, untold billions in subsidies, hundreds of millions in foreign aid each year that's meant to stop immigration - The list goes on and on. Then there's the inflation in housing and goods caused by the extra demand of tens-of-millions of illegals, along with the wage depletion caused by foreign workers taking around 30% less pay than the average American worker.
Of course, Mexico has already been allowing illegal immigrants to flood into the US for decades, so it's not much of a threat anymore.
Mexico's response to Trump's tariffs will be to capitulate, the only question is how long will it take them to realize that this is their only option. Sheinbaum behaves like most leftists/socialists in that she is often sarcastic, petulant and unruly in her rhetoric, but it's all a show. Once Mexico understands that their prosperity is entirely contingent on US benevolence, they will fold and then act like victims.
Victims of normal trade restrictions and normal border laws that they have violated for years while feeding parasitically off the US.
