Mexico’s President Claudia Sheinbaum now faces several critical choices as she deals with the threat of 25% blanket tariffs from the U.S.
U.S. President Donald Trump imposed the tariffs on March 4, but two days later exempted Mexican goods covered by the USMCA trade agreement—about half of Mexico’s exports to the U.S. This exemption is scheduled to expire on April 2.
For now, Sheinbaum has the benefit of high approval ratings and an apparently positive working relationship with Trump. But Mexico’s economy was already facing headwinds, and more uncertainty lies ahead.
On March 9, Sheinbaum delivered a speech in Mexico City’s Zócalo before a packed square of tens of thousands of people. The event had been planned to announce Mexico’s retaliatory response to blanket tariffs, but because they were postponed, it had a celebratory feel as Sheinbaum addressed the trade negotiations and laid out her next steps.
AQ asked analysts to share their reactions and perspectives.
Ernesto Revilla
Managing director and head of Latin American economics at Citigroup
President Sheinbaum’s rally on March 9 was initially billed as a response to the 25% U.S. tariffs imposed on March 4. Yet, after Washington announced a one-month delay, the event morphed into a nationalist celebration. At first glance, little was revealed—Mexico’s strategy for dealing with permanent tariffs remains unclear, and the government has yet to outline how it plans to manage the economic shock if tariffs do happen.
Yet Sheinbaum has been praised for her composed handling of Trump, although Mexico’s results so far mirror those of Canada, which has taken a more steadfast and confrontational approach. The jury is still out on whether Mexico and USMCA will be spared permanently.
Still, Sheinbaum has reason to celebrate. Confrontation with the U.S. has propelled her approval rating to 85%, the highest for a Mexican president in three decades. Trump, who has often clashed with leaders like Justin Trudeau and Gustavo Petro, has maintained a cordial tone, praising his “wonderful conversation” with Sheinbaum and describing their relationship as “very good.” More significantly, the U.S.-Mexico trade dispute has diverted attention from Mexico’s contracting economy—shrinking since Q4 2024—largely due to waning domestic confidence following constitutional reforms that eroded institutional checks and balances. While the private sector voiced concerns over these reforms, it is now broadly supportive of Sheinbaum’s handling of trade tensions.
Yet, it remains to be seen whether this celebration is premature. The tariff delay is temporary, and in 30 days, Washington will announce “reciprocal tariffs” targeting a broader set of countries. Sheinbaum confidently asserted in her rally that Mexico will be spared, arguing that the new tariffs will target nations imposing duties on U.S. goods—something Mexico does not do as part of the USMCA. However, some U.S. policymakers have suggested a broader definition of reciprocity, one that includes countries with large trade surpluses with the U.S. (like Mexico) or those that levy a value-added tax (VAT) on imports (Mexico again). If this interpretation holds, Mexico could be in trouble once more.
Markets, like Sheinbaum, seem to bet on USMCA’s durability, as reflected in the muted reaction of Mexican assets this last week. Investors assume that economic logic will prevail, given that tariffs would also hurt the U.S. economy. But this optimism may be misplaced. Unlike during Trump’s first term, tariffs are now framed as central to a broader effort to rebalance trade and reindustrialize the U.S. Even if Mexico has twice avoided tariffs in the past month, uncertainty now looms over North American free trade and that will be terribly damaging.
Trade agreements like NAFTA and USMCA were designed to provide decades of stability and predictability—crucial ingredients for investment. Today, that certainty barely lasts a month.
Vanessa Rubio
Professor at the School of Public Policy at the London School of Economics (LSE) and senior advisor at McLarty Associates.
It has been a tough and painful negotiating process so far, with relatively positive results for Mexico at the negotiating table, given that the 25% blanket tariff hasn’t materialized. However, structural damage has been done to the bilateral relationship, and to Mexico’s balance of risks. The bilateral agreement (first NAFTA, then USMCA) gave an anchor of certainty to doing business in the country.
The private sector knew that most goods and services could be exchanged between Mexico and the U.S. on a free trade basis, and in those cases where tariffs applied, they were clear and transparent. Plans for investment and trade were therefore made under a predictable framework, and it is precisely this key factor that has been taken away. Uncertainty is harming the business environment in Mexico, and some of the damage will be permanent.
All current and future investments will need to factor in this new uncertainty. The Mexican government will have to keep negotiations open, and will have to navigate a very complex environment. In addition to making concessions and agreements in response to U.S. requests, the Mexican government will also have to seek commitments from the U.S. for Mexican priorities, which will be a delicate task. These include addressing drug consumption (demand) in the U.S.; fighting those cartels that operate on U.S. soil to distribute and sell drugs; acknowledging the fact that cartels in Mexico operate with arms that come from the U.S.; and ensuring the principle that in a partnership, one avoids surprises and exchanges information and intelligence on a reciprocal basis.
Sofía Ramírez Aguilar
Director of the Mexico: ¿como vamos? think tank
So far, President Sheinbaum has handled the uncertainty of negotiations with the Trump administration masterfully, meeting the domestic demand for information on Mexico’s plan regarding various tariff scenarios.
Externally, Sheinbaum showed patience and composure amid tensions over the 25% general tariffs that the U.S. temporarily imposed on all Mexican goods. As Washington D.C. became the epicenter of the tariff talks, she maintained her steady course and waited for action from the U.S. government. She remained assertive but honest, even showing surprise when the tariff’s D-Day came and went without an agreement to head it off.
Sheinbaum used this same honest approach in her public square speech in Mexico City on Sunday, March 9. She recounted the latest events, from Trump’s initial tariff threats last February to the call with him on Thursday, March 6, when the tariff implementation was postponed to April 2. Her speech served both to rally her Morena fanbase and curry favor with former President Andrés Manuel López Obrador’s supporters, saying repeatedly that government decisions are made for and with the people.
Sheinbaum’s most important message was delivered at the event’s conclusion: a five-step economic plan to address whatever adversity comes Mexico’s way:
1. Strengthen the domestic market; continue raising the minimum wage.
2. Expand self-sufficiency in basic foods and energy.
3. Public investment to promote job creation.
4. National production for the domestic market in coordination with the Mexican private sector.
5. Strengthen popular transfer programs.
But the success of these points hinges on key factors that may not hold up:
1. Mexico is experiencing economic dynamism, which we aren’t;
2. There will be continued public investment spending. This occurred in January 2025, but it’s probably too early to tell whether it’s credible for the rest of the term;
3. Mexico refines its oil efficiently, which we don’t, and drought isn’t affecting domestic crops, which it is; and
4. On the heels of the controversial judicial reform, the selection of new judges this summer ensures a professional, effective judicial branch and provides legal certainty to investors, an outcome very much in doubt.
Sheinbaum does have some factors working in her favor. She is extremely popular, reaching 85% approval in February. Moreover, the Mexican people are open to free trade, and U.S. companies have powerful economic reasons to pressure their government not to impose tariffs. But her plans appear less viable when the current adverse economic conditions and threats to rule of law and legal certainty are taken into account.
