Tariffs are common across all countries, as they are used to protect domestic industries. But beyond the commercial aspect, exporting companies and consumers’ wallets are also impacted.

In the case of tariffs in Mexico, any change in the rules of the game can trigger a chain reaction—especially when those changes involve its main trading partners, like the United States.

Therefore, if you want to anticipate their possible consequences, you need to understand the effects of tariffs on the economy and foreign trade. Especially now that the U.S. has announced a 25% tariff on Mexican goods. This situation serves as a starting point to analyze the real impact of such measures on Mexico.

Tariffs in Mexico: How They Affect the Mexican Economy and International Trade

Impact of Tariffs on the Mexican Economy

Although tariffs in Mexico are linked to foreign trade, their effects are strongly felt in the local economy. As a result, they also impact consumers directly.

The recent 25% tariff imposed by the U.S. on Mexican products is a clear example of their impact—affecting companies that rely heavily on the U.S. market.

Some of the effects of tariffs on the Mexican economy include:

Rising Cost of Living and Lower Product Availability

Companies facing higher costs to export or import supplies may pass those increases onto final prices in the local market. Additionally, some businesses may reduce production or distribution, affecting the availability of goods and services across the country.

Loss of Purchasing Power

If price increases outpace wage growth, monthly household income will buy less. This translates into a direct loss of purchasing power.

This situation hits hardest for those who spend most of their income on basic needs like food, transportation, and utilities.

Reduction in Jobs and Income

Exporting companies may need to downsize their workforce or freeze salaries to manage losses. This directly impacts many job sectors, especially those tied to manufacturing, trade, and services.

More Expensive Credit and Financing Restrictions

If the peso weakens or inflation rises, the Bank of Mexico may need to increase interest rates. As a result, you’ll end up paying higher fees on mortgages, credit cards, or personal loans.

Greater Pressure on Personal Finances

The current outlook might push you to avoid dollar-denominated debt and prioritize essential spending. And while that’s not necessarily a bad thing, it also means looking for substitute products and cutting expenses to make your money last.

If there’s a prolonged loss of purchasing power, preparing in advance is your best defense.

In this regard, there are several options—one of them is using UDIS for saving or investing. Why? Because their value increases with inflation, helping preserve your money’s real value over time. Of course, you can also explore other financial solutions.

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How Tariffs Affect the Trade Relationship Between Mexico and the U.S.

Since the implementation of TLCAN and its renewal under the T-MEC, Mexico and the United States have developed an integrated trade network. This, in effect, has supported the growth of key sectors on both sides.

However, the recent application of Trump’s tariffs could disrupt that balance and lead to consequences beyond borders.

Now, how exactly do tariffs in Mexico impact this strategic relationship?

In several ways—let's look at some of them:

• Hit to Key Export Sectors. Tariffs increase product prices and affect the demand for industries that represent up to 80% of Mexican exports to the U.S. This includes the automotive, electrical, and machinery sectors, which also see a drop in competitiveness

• Threat to Employment and Investment. The automotive industry, for example, employs hundreds of thousands of people and generates millions of indirect jobs. A tariff can lead to rising production costs. This could result in layoffs, cancelled investments, and even the relocation of plants to other countries

• Decrease in Trade Volume. With higher prices, U.S. consumers may delay purchases or look for suppliers outside of North America, reducing trade flows between both countries.

• Exchange Rate and Inflation Effects. Trade tensions can also cause fluctuations in the exchange rate and inflationary pressures in Mexico, affecting the country’s economic stability.

Ultimately, tariff types like Trump’s can unbalance a trade relationship that has been mutually beneficial for decades.

Despite attempts to protect certain industries, they cause long-term distortions. We’re talking about economic losses, as well as tension between two strategic partners.

Impact of Tariffs on Mexico’s International Trade

Beyond affecting Mexico’s internal economy, Trump’s tariffs alter its trade relations with the world.

But just as they may reduce trade flow with the U.S., opportunities may also begin to emerge in other regions.

Here’s what you should know:

Drop in Exports and Tensions with the U.S.

• The 25% tariff on Mexican products increases their cost in the U.S. market, reducing demand. The automotive, electronics, and steel sectors are the most affected.

• Regional integration under the USMCA means that these types of tariffs also harm U.S. and Canadian companies that rely on Mexican inputs.

• With the fall of the Mexican peso in 2024, domestic products became cheaper in dollars. However, that’s not enough to offset the impact of Trump’s tariffs.

Europe as an Alternative: Opportunities and Challenges

Given the new tariffs imposed by the U.S. in 2025, the EU could see Mexico as a strategic partner. This would allow Europe to expand its import sources and reduce trade dependence on the U.S. Moreover:

• The strengthening of the trade agreement with the European Union in April 2025 opens a path to market diversification.

• Some products could enter the European market if tariffs persist. In that case, several industries, such as automotive and agriculture, could benefit.

On the other hand, competing in Europe involves logistical challenges and high transportation costs. Additionally, Mexico would face strong competitors like China and Vietnam.

Likewise, it’s important to consider that reshaping supply chains toward Europe would be slow and expensive—although strategic in the medium term.

Relationship with Asia

China also faces 20% tariffs, which were doubled in March 2025. In that context, Mexico stands out as a strong ally thanks to its geographical position and direct connection with Latin America.

As a result, Chinese investments in manufacturing are coming to Mexico under the nearshoring model. In turn, Mexico is seeking partnerships with Southeast Asian countries through the CPTPP, especially with Japan, Australia, and Vietnam.

But Mexico’s heavy reliance on the U.S. market limits fast diversification. Moreover, Asian competition, along with cultural and logistical barriers, present significant challenges.

Final Thoughts…

All these trade tensions and other changes are pushing both companies and consumers to adopt strategies that help them remain resilient.

As a Mexican, using DolarApp can be a useful alternative. By operating with a USDc (digital dollars) account, you can protect your money in times of volatility.

You also have the convenience of sending, receiving, or paying in digital dollars without needing a U.S. bank account. With DolarApp, there are no extra fees, and you’ll always have access to a fair exchange rate.