News
08/04/25
Mexican peso weakens on US tariff fears
Mexico City, 8 April (Argus) — The Mexican peso has weakened in recent days amid
growing fears that US president Donald Trump's new wave of tariffs could derail
the US economy and, in turn, slash Mexico's economic growth, financial analysts
said. After Trump announced a series of new import tariffs on what he dubbed
"Liberation Day" on 2 April, the peso initially reacted positively, as Mexico
was largely spared from the measures, thanks to protections under the
US-Mexico-Canada (USMCA) free trade agreement. The current tariff structure
largely remains in place, which means zero tariffs on products under the USMCA
agreement, except for steel, aluminum and finalized// assembled automobiles.
Auto parts under USMCA still face zero tariffs. These exceptions, and other
non-USMCA-compliant products, maintain 25pc tariffs on non-US content, analysts
Barclays said. The peso appreciated more than 3.2pc to Ps19.97/$1 on 3 April
from Ps20.4/$1 on 2 April, according to data from Mexico's central bank
(Banxico). The exemptions could make Mexico more attractive in the medium- and
long-term to manufacturers aiming to avoid US tariffs, Barclays said. Yet,
investors are now concerned about the broader economic fallout of the escalating
US-China trade conflict. "The Mexican peso is one of the most depreciated
currencies [as of 7 April], because even though Mexico has not been hit with
reciprocal tariffs and benefits from USMCA, the economic impact of tariffs on
the US economy could significantly affect Mexico," said Gabriela Siller, chief
economist at Mexican bank Banco Base. The peso weakened to Ps20.50/$1 on 4
April, from Ps19.97/$1 on 3 April, and continued weakening, closing at
Ps20.69/$1 on 7 April, a 2.3pc depreciation over the last week. Year over year,
the peso has tanked 21pc, affected by multiple reforms diminishing Mexico's
business environment that passed in late 2024, Trump's electoral victory in
November, and now by Trump's tariffs. Mexico's GDP is expected to grow by 0.2pc
this year, according to a new Citi survey of 32 bank analysts, with nine
forecasting zero or negative growth because of the potential fallout from US
trade policy. On 1 April, Mexico's finance ministry lowered its 2025 GDP
forecast to 1.5–2.3pc, down from 2–3pc. That's still more optimistic than the
central bank and private analysts, who expect growth of only 0.7pc , citing
uncertainty over US policy and tariff threats. By Édgar Sígler Send comments and
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