On February 1, 2025, U.S. president Donald Trump signed an executive order under the International Emergency Economic Powers Act(IEEPA), imposing 25% tariff on imprts from Mexico and Canada, alongside a 10% tariff on Chinese goods. The administration justified the move by citing Mexico's alleged failure to curb illegal immigration and grug trafficking along the U.S souther border.
In response, the Mexican government swiftly announced the activation of "Plan B", a countermeasure involving retaliatory on key U.S. exports to Mexico, such as argricultureal products, auto parts and energy goods. Additionally, the government ordered thousands of soldiers and National Guard personnel to the U.S.-Mexico border to reinforce security and prevent any escalation of economic tensions into a full-blown crises. However, on February 3, Trump announced a 30 days suspension of the tariffs stating that he would reassess the situation based on Mecico's and Canada's responses.
The Mexican government strongly condemned the tariffs, with President Claudia Sheinbaum warning that they violate the U.S.-Mexico-Canada Agreement (USMCA) and threaten North American supply chain stability. Economists suggest Trump is using tariffs as leverage to pressure Mexico into taking greater responsibility for U.S. border security issues. In retaliation, Mexico imposed counter-tariffs on U.S. exports and increased border security measures to demonstrate efforts in addressing U.S. concerns. Analysts believe Mexico’s actions serve as both an economic safeguard and a diplomatic signal to Washington amid heightened trade tensions.
Beyond North America, the trade conflict may indirectly impact Chinese businesses. As Mexico and Canada face reduced exports to the U.S., their demand for Chinese-sourced intermediate and capital goods is expected to decline. Many Chinese firms have invested in Mexico to take advantage of USMCA trade benefits, but stricter origin-tracing audits and potential tariff hikes could disrupt their supply chains. Additionally, Washington may tighten regulations on cross-border e-commerce shipments, further constraining Chinese exports. To mitigate risks, Chinese companies must closely monitor policy shifts, explore alternative production hubs, and adapt their supply chain strategies in response to evolving trade dynamics.