The qualifier explains that tariff increases can weaken internal trust, generating a difficult impact to prevent, and although the depreciation of the currency would provide some protection to exporters compared to tariffs, it would also make their supplies costs.
In a recession scenario caused by these tariffs, the ability to apply a countercyclical monetary policy would be restricted due to financial instability and currency depreciation.
In addition, retaliation measures represent additional risks that were not contemplated in Fitch estimates.
“Tariff impacts are difficult to predict given the complexity of supply chains between the United States and Mexico and could even be greater given the second round effects,” he says.
Increases risk over sovereign
The credit rating of Mexico, ‘BBB-‘/stable, reflects moderate economic growth, which led to two sales by Fitch since 2018. This suggests that the country could support a slightly worse economic impact.
However, if the economy deteriorates and affects public finances, the risk will increase. This could make the debt in relation to GDP, which was 51% in 2024 (below the average of 55% for countries with ‘BBB’ rating.
Fitch highlights that Mexico began 2025 with a more fragile fiscal base than in previous years, after the increase in spending during the 2024 electoral year, which raised the public sector deficit to 5.7% of GDP.
By 2025, the budget of President Sheinbaum seeks to reduce the deficit to 3.9% through cuts in investment and social spending. “If the income is not expected or the cuts are complicated, the tax administration measures and the public services transfers of Banxico could help stabilize public finances. However, fiscal consolidation would face greater risks in a context of low growth , especially if the government is pressed to provide financial support, “he concludes.
