The tariffs proposed by Donald Trump
In 2023, 83.4% of Mexican exports were destined for the United States; Until August of this year the percentage reached 84.3%, according to information from DataMéxico.
For now, Trump has said that the 25% tariff will apply to all Mexican products. We will have to wait for both the final percentage and the tariff fractions on which it will be imposed.
But economists warn that Trump’s tariff plans would push U.S. tariffs back to 1930s levels, stoke inflation, collapse U.S.-China trade, provoke retaliation and dramatically rearrange supply chains.
Volatility will continue for the peso
The volatility of the Mexican peso against the dollar will continue in 2025, as happened in 2024, but now other factors will determine its value against the US currency.
In addition to the return of Donald Trump to the White House, on January 20; The parity in the exchange rate will be affected by geopolitical issues, the bilateral relationship between Mexico and the United States and local fiscal policy, say specialists.
The forecasts for the exchange rate at the end of next year range from 19.50 to 21 pesos per dollar. While the Ministry of Finance expects the exchange rate to average 20.70 pesos per unit.
Meanwhile, Bank of Mexico (Banxico), in the survey carried out among private sector analysts, places the exchange rate at 20.50 pesos.
“The entry of Donald Trump, at least for the first three months, may represent a scenario of volatility for the Mexican currency. We could see a complicated scenario. We already see a floor of 20 pesos, in the short term at least,” said Humberto Calzada, chief economist at Rankia Latam.
Inflation that is declining at a slower pace
2025 will be another year in which Banco de México cannot bring inflation to the specific objective of 3%. The same central bank has postponed the convergence of the goal until the third quarter of 2026 in a scenario in which geopolitical conditions are not so favorable.
The tariffs proposed by the president-elect of the United States are a factor that, according to the Banxico Governing Board, will cause a complex scenario for inflation.
“The possibility of tariffs being implemented on United States imports from Mexico has added uncertainty to the (inflation) forecasts,” the Bank of Mexico has warned.
A historical heritage
The difference between spending and income that reaches public coffers is set to register its highest proportion on record, compared to the Gross Domestic Product (GDP) at the end of 2024.
At the end of September of this year, the last month of the administration led by Andrés Manuel López Obrador, the fiscal deficit, measured through the Financial Requirements of the Public Sector, grew 45.6%, reaching 1,266 billion pesos, the highest level on record, and which President Claudia Sheinbaum inherited when she took office on October 1, 2024.
When presenting the first Economic Package for this new administration, on November 15, the Treasury reported that it estimates that this deficit will reach 5.9% of GDP by the end of 2024, and its objective is to reduce it to 3.0% of GDP.
The intention, the cuts and adjustments to the budget, to reach this goal, earned it a negative outlook on its credit rating from Moody’s and HR Ratings, while S&P confirmed its BBB+ rating and maintained its stable outlook.
At the end of 2025, it will be seen whether or not the Treasury achieves this objective, and in that sense, the rating agencies will have to review Mexico’s credit rating.
