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  February 3rd, 2025 | Written by

Mexico Strengthens Economy Amid Potential US Tariffs

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Mexico is proactively safeguarding its economy from the ramifications of potential US tariffs, as highlighted in a recent Bloomberg report. The country’s Finance Minister, Rogelio Ramirez de la O, emphasized Mexico’s readiness in a call with investors, citing substantial international reserves capable of mitigating the stress on exports.

Read also: Trump’s Sweeping Tariffs on Mexico, Canada, and China Trigger Global Trade Showdown

As concerns about tariff impacts on emerging markets loom, Mexico’s peso showcased resilience, reversing a significant sell-off to gain 0.6% following a positive discussion between Mexican President Claudia Sheinbaum and US President Donald Trump regarding a month-long postponement of the proposed 25% tariffs. This backdrop underscores the peso’s flexible exchange rate as a natural buffer, potentially reducing the effective impact of such tariffs significantly.

Despite the cautious optimism, Ramirez articulated anticipations of a potential economic slowdown, especially in the manufacturing sectors such as autos and computing. According to Data from IndexBox, Mexico’s automotive manufacturing industry, a substantial portion of its export economy, could face significant pressures, which could reverberate through its GDP growth projections.

The Finance Minister also highlighted Mexico’s strategic liquidity measures, including about $44 billion in available financial support through the International Monetary Fund and the US Federal Reserve. Collaborations with Banco de Mexico also aim to safeguard currency market liquidity, with authorities prepared to act against market volatility.

Marco Oviedo, a strategist at XP Investimentos, pointed out that while Mexico remains averse to direct market interventions, it stands ready to counter excessive volatility that could compromise market performance.

Source: IndexBox Market Intelligence Platform