To One Tariff, Another in Response

The following morning, Mexican president Claudia Sheinbaum led off her morning press conference by reading out the letter she had written in response. She began by pointing out a few statistics of which the president-elect was “probably not aware”: border encounters were reduced by 75 percent between December 2023 and November 2024, and half of those who did arrive had appointments procured through the US Customs and Border Protection’s app. “Even so,” she adds, “it is clear that we must jointly arrive at another model of labor mobility that is necessary for your country and to address the causes that lead families to leave their places of origin out of necessity. If just a percentage of what the United States allocates to war is dedicated to building peace and development, this mobility issue will be addressed in depth.”

The text then turns to Mexico’s work to address the fentanyl epidemic, pairing it with a discussion of illegal arms trafficking. “Seventy percent of the illegal weapons seized from criminals in Mexico come from your country,” Sheinbaum writes. “We neither produce the weapons, nor do we consume the synthetic drugs. Those killed by crime to meet the demand for drugs in your country, unfortunately, those we do provide.”

Then comes the following thrust:

President Trump, neither the migration phenomenon nor drug use in the United States will be addressed by threats or tariffs. These major challenges require cooperation and mutual understanding. One tariff will be met by another in response, and so on until we put common companies at risk. Yes, common ones. For example, the main exporters from Mexico to the United States are General Motors, Stellantis, and Ford Motor Company, which arrived in Mexico eighty years ago. Why impose a tax that puts them at risk? It is not acceptable and would cause inflation and job losses for the United States and Mexico.

The missive — diplomatic, firm, and wholly unambiguous about the potential for retaliatory tariffs — met with a swift response. The following day, Sheinbaum and Trump spoke by telephone, the second time they have done so since the November 5 election, after which the president-elect blasted out a series of posts on his Truth Social account.

The first contended that Sheinbaum had agreed to stop migration through Mexico, effectively closing the southern border, something the Mexican president subsequently made clear was not the case. The second announced his intention to launch a large-scale anti-fentanyl campaign, which Sheinbaum had recommended on the call. And the third doubled down on the supposed Mexican agreement to stop people from reaching the border, ending with a “Thank you!” Without promising anything new, Sheinbaum had succeeded both in shifting the conversation away from tariffs and triggering one of Trump’s classic premature, face-saving declarations of victory. Round one for Mexico.

Southern Sangfroid vs. Northern Fealty

The president-elect wasn’t the only one taking notice. Sheinbaum’s letter received ample coverage in the United States, with favorable reports from as far away as China and South Korea. Even Democratic Party–affiliated accounts that had never demonstrated the least bit of interest in Mexico got in on the act, gushing that “this is what a real leader sounds like.” Sheinbaum had “fought” or “struck” back; Trump had “bent the knee,” been “outmaneuvered,” “crushed,” or, in a metaphorical nod to Thanksgiving, “carved up like a turkey.” For an anglophone press that has oscillated between ignoring and disparaging Mexico’s political transformation for the better part of the last six years, the sudden conversion was jarring. Rather than a burst of interest in its southern neighbor, the episode was largely explainable by its useful incorporation into standard anti-Trumpian discourse.

The presidenta’s adult-in-the-room sangfroid also benefited from a favorable comparison with the reaction coming from the other party to the United States–Mexico–Canada Agreement (USMCA). Building on comments made by the premiers of Ontario and Alberta that Mexico should be left out of a renegotiated free-trade pact (the current USMCA is up for revision in 2026), Prime Minister Justin Trudeau was moved to declare that, while he had expressed to Sheinbaum his desire for Mexico to remain in the agreement, Canada was “leaving all doors open” and that “pending decisions and choices that Mexico has made, we may have to look at other options.”

In addition to the very Trudeauian habit of saying one thing in private and another in public (leading to a public dressing-down by Chinese president Xi Jinping at the G20 in 2022), the paternalistic demonstration of pre-electoral pandering was particularly grating for Mexicans in light of the fact that it was Andrés Manuel López Obrador (AMLO) who, as president-elect in October of 2018, lobbied for Canada to remain in the revised agreement when Trump was maneuvering to leave it out. Not content with his public willingness to throw Mexico under the bus, Trudeau then whisked off to pay court to Trump at Mar-a-Lago several days later, with nothing to show for it except for becoming the butt of the president-elect’s jokes.

Copying a page out of Trump’s playbook, Canada’s ostensible reason for such double-talk is that China is using Mexico as a back door into the markets of its northern neighbors. Yet when asked for evidence that this is happening, Deputy Prime Minister Chrystia Freeland proved singularly unable to do so. Both Canada and the United States seem to be heading toward conditioning Mexico’s participation on its adoption of their tariff policy on China — an imposition that, ironically, could wind up pushing Mexico closer to BRICS.

But for Canada, there is another, more veiled reason that hits even closer to home: mining. Canadian firms dominate the industry in Mexico, holding 73.5 percent of the country’s foreign-owned mines. Despite their grandiose claims to provide jobs and tax revenue, a recent investigation by SinEmbargo revealed that less than 1 percent of both formal-sector employment and tax receipts come from mining, the latter in large part due to rampant evasion on the part of Mexico’s would-be international benefactors.

Case in point, the company First Majestic Silver is currently in the process of attempting to wrap itself in the USMCA to avoid paying a $180.3-million-dollar back-tax bill for price manipulation and the illegal repatriation of earnings on the part of its subsidiary, despite a clear warning from the Mexican Tax Department (SAT) that “all issues related to fiscal affairs are separate from international treaties; fiscal matters are resolved in the country where the problem occurs.”

In 2023, Mexico approved a mining reform that, among other things, makes it easier for the government to cancel licenses for companies that do not cough up their taxes. It also reduces the duration of licenses from fifty to thirty years, discontinues “preferential” treatment for mining activities, prioritizes water for domestic use, and requires consultations with local and indigenous communities before new projects are undertaken. Watered-down in Congress, the reform represents a first step, however hesitant, toward remedying an abusive state of affairs that dates back to the eve-of-NAFTA mining law of 1992.

In this year’s budget, furthermore, the supplemental tax on mining has been raised from 7 to 8.5 percent, while the surcharge on gold, silver, and platinum mining has gone up from 0.5 to 1 percent. However modest, these increases are enough to enrage an industry that has for decades swaggered around the country as if it owned the place. In this light, Trudeau’s threats can be seen in a still more menacing light: Want to stay in the treaty? Leave our mining interests alone.

Take Two

If it seems like we’ve been here before, it’s because we have. In May of 2019, President Trump threatened Mexico with an escalating series of tariffs if Mexico did not immediately resolve the immigration issue, providing an early test for the AMLO administration. Although Trump engaged in the same pantomime as with Sheinbaum, declaring that his brinkmanship had induced AMLO to make concessions he had not, the resulting agreement was nevertheless not a good one for Mexico.

While it did not agree to become a “safe third country” (which would have required those seeking asylum to apply in Mexico), it did agree to host thousands of US asylum seekers through the “Remain in Mexico” policy. In addition, it dispatched several thousand National Guard troops to its border with Guatemala and stepped up enforcement measures on public transportation, effectively using racial profiling to yank suspected migrants off of buses and other transportation. The inhumane treatment of migrants came to a head in March of 2023, when a migrant protest at a detention center in Ciudad Juárez provoked a tragic fire that killed forty and wounded a further twenty-seven due to the failure of officials to evacuate the cell in time.

The Sheinbaum administration must not go down this road again. Five years later, Mexico finds itself in a much-strengthened position, with significant advances having been made in crucial areas such as energy and food sovereignty that would provide it with greater resilience against any tariff scenarios. In that time, Mexico has leapfrogged to become the United States’ number-one trading partner. The United States, meanwhile, is correspondingly weakened, indebted, and overextended on multiple fronts in Europe, the Middle East, and the Pacific.

With Trump having won reelection largely on inflation and cost-of-living issues, he cannot easily afford the inflationary pressures that both tariffs and his deportation policies stand to aggravate. President Sheinbaum also enjoys a buoyant approval rating, something neither Trudeau nor Trump share, a reservoir of popular support that allows her to weather, at least temporarily, the effects of a trade war. Indeed, her willingness to take on the bullies could even improve it. As for the migrants in Mexico, it would be hard to imagine how they could tolerate another turn of the screw.

The pre-announced crisis also provides Mexico with a welcome opportunity to review its trade policy. In the course of a generation, Mexico’s parliamentary left has undergone a strange metamorphosis from fierce opponents of NAFTA in the ’90s to fervent supporters of its successor today. Part of this has to do with bowing to reality, as the pact has wrought changes that are very hard to undo, as was one of its original motivations. Part has to do with Sheinbaum’s aspirations to create a North American powerhouse so that Mexico takes over from China as the bloc’s manufacturing supplier in the event of a freezing of relations between the two superpowers.

But as tariff threats — and even invasion threats — follow one after the other from its supposed closest partners, it may be time to question the wisdom of putting so many eggs in the basket of a declining empire, one especially ill-equipped to deal with the transformations of a multipolar reality. It’s a big world out there, and Mexico would do well to recall that, contrary to what the United States and Canada would have it believe, they are not the only game in town.