These Mexican states will feel the greatest impact from US tariffs

Ten of Mexico’s 32 states could beryllium highly susceptible to U.S. tariffs connected Mexican products, the U.S. recognition standing bureau S&P Global Ratings forecast connected Thursday.

Several Mexican states trust connected export-oriented manufacturing, peculiarly successful the northbound and Bajío (central) regions. In total, astir 80% of Mexico’s exports are destined for the U.S., astir 40% of them successful car manufacturing.

A Toyota automotive works located successful the bluish metropolis of Tijuana. (Baja California) (Omar Martínez/Cuartoscuro)

On Feb. 1, the U.S. authorities announced a 25% tariff connected imports from Mexico and Canada. The White House aboriginal delayed the tariffs to March 4.

Mexico’s President Claudia Sheinbaum announced connected Tuesday that her authorities volition respond with its ain “tariff and nontariff measures.”

S&P’s forecast shows that the Mexican states of Baja California, Chihuahua, Sonora, Coahuila, Nuevo León, Tamaulipas, San Luis Potosí, Guanajuato, Querétaro and Aguascalientes volition apt consciousness the biggest interaction of the tariffs, arsenic implicit 20% of their GDP comes from industries moving goods betwixt Mexico and the United States and selling products to the U.S.

The states of Jalisco, Hidalgo, México state, Morelos, Puebla, Oaxaca and Tlaxcala look mean vulnerability to the tariff threat, with betwixt 10% and 20% of their GDP coming from susceptible industries.

If the tariffs stay successful spot for months oregon quarters, alternatively than weeks, Mexico’s system could beryllium deed hard, according to S&P.

The sectors expected to beryllium astir exposed to the daze are proscription manufacturing (including machines and equipment, centrifugal vehicles and semitrailers), electrical instrumentality manufacturing and basal metals (including alloy and aluminum).

Steel manufacturing is different Mexican manufacture expected to beryllium hard deed by U.S. tariffs. (Alto Hornos de Mexico)

S&P estimates that a driblet successful request spurred by tariffs could alteration accumulation successful definite sectors by 8%–15%. 

Some states, specified arsenic México authorities and Hidalgo, person much divers economies, making them little susceptible to tariffs. However, marketplace uncertainty could pb to reduced private-sector concern successful Mexico, hindering economical growth, said S&P. 

Banco Base’s assessment

The Mexican fiscal instauration Banco Base besides predicted connected Feb. 2 that tariffs’ biggest interaction would beryllium connected bluish Mexico, naming states whose exports lend a precocious proportionality of their GDP. Banco Base’s database of those apt to beryllium astir affected included Chihuahua, Coahuila, Baja California, Tamaulipas, Sonora and Nuevo León.

 “If tariffs travel into effect, this volition mean a collapse, archetypal for Mexican exports. This implies a little proviso of dollars arriving successful Mexico and truthful increases successful the speech rate,” said Banco Base’s Director of Economic Analysis Gabriela Siller.

With 25% tariffs, explained Siller, “… overseas companies would nary longer person incentives to reinvest their profits successful Mexico and instal caller plants.” 

Meanwhile, the Mexican Institute for Competitiveness (IMCO) said successful a caller study that it expects tariffs to deed highly integrated industries successful the portion harder, specified arsenic automotive, aerospace, electronics and agriculture.

IMCO expects immoderate commercialized obstruction to summation the outgo of accumulation arsenic good arsenic trim competitiveness against different markets. 

With reports from S&P Global and El Economista