Laredo, Texas – On February 1, President Donald Trump imposed 25% tariffs on Mexican imports, aiming to pressure Mexico’s government to curb migrant and drug flows across the border. This move comes as a significant blow to the deeply integrated economies of the United States and Mexico, which have been closely linked through trade, tourism, and cultural ties for decades.
Laredo, America’s busiest port, sees nearly $1 billion of commerce and over 15,000 trucks crossing the border daily. The tariffs also affect Canadian goods and impose a 10% tax on Chinese imports.
Trump’s decision has sparked concerns among businesses and economists, who warn that severing these economic ties would be painful. The US-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement (Nafta), is now under scrutiny, with some calling for its update or even scrapping.
The Covid-19 pandemic and the subsequent “nearshoring” boom have further solidified Mexico’s importance to the US economy. In 2023, Mexico became the US’s top trading partner in goods. The bilateral trade deficit with Mexico has also expanded, a metric Trump is particularly focused on.
The tariffs could have far-reaching implications for various sectors, including energy and food production. Mexico relies on the US for 70% of its natural gas consumption, while the US imports about 700,000 barrels of crude oil daily from Mexico. Additionally, Mexico supplies roughly half of America’s fresh fruit and vegetables.
As the two economies navigate these challenges, the impact of the tariffs on businesses and consumers remains to be seen.