The 25% tariff on all US imports from Mexico that came into force today will, if it stays in place, knock Mexico’s economy into recession in the coming quarters. A contraction in GDP this year of 1% would be plausible. And unlike Canada and China (also facing higher tariffs from today), Mexico’s government has no fiscal space to support the economy. Even if some form of deal is reached to lift this tariff, the continued threat of US trade barriers will weigh on confidence and investment and drag on GDP growth.
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