Background on Key Figures and Relevance
Goldman Sachs, a prominent global investment bank, has maintained its forecast of zero growth for Mexico’s economy with an upside bias. This assessment comes despite acknowledging that the recently announced 30% tariff increase by the United States will impact economic activity.
The letter addressed to clients highlights that President Donald Trump’s communication on his social media platform, Truth Social, about the 30% tariff increase for Mexican products does not clarify if goods exempted under the USMCA rules will continue to be so.
Current Situation and Negotiations
Goldman Sachs emphasizes that negotiations are ongoing and they cannot adjust their forecast since the potential retaliation measures remain uncertain.
“It’s unclear whether Mexico will opt for retaliation, but we believe Mexican authorities are likely to continue collaborating constructively with the U.S. administration on border control matters and somewhat tighten their stance against drug cartels to preserve access to the U.S. market.”
Should retaliation occur, it would result in a more negative impact on Mexico’s economic activity and inflation.
Trump’s Letter to Mexico’s President
Title: “México también recibió una carta”
On July 12, Goldman Sachs referred to a letter sent by President Donald Trump to Mexico’s President, Claudia Sheinbaum. In this letter, Trump announced the implementation of a 30% tariff on all products entering the United States.
In the letter, addressed to President Sheinbaum, Trump acknowledged collaboration with Mexico on curbing migration and fentanyl trafficking, but stressed that “BUT it has not been enough.” He warned in capital letters that Mexico has yet to apprehend the cartels attempting to transform all of North America into a playground for narco-trafficking.
Key Questions and Answers
- What is Goldman Sachs’ current forecast for Mexico’s economy? Despite the 30% tariff increase, Goldman Sachs maintains a zero-growth forecast for Mexico’s economy with an upside bias.
- What does Trump’s letter to Mexico’s President state? The letter acknowledges collaboration on migration and fentanyl issues but asserts that more needs to be done, as cartels continue their activities.
- What are the uncertainties surrounding tariff implementation? The letter does not clarify if goods exempted under the USMCA rules will remain so, and ongoing negotiations make it unclear if Mexico will retaliate with additional measures.
- What are the potential consequences of retaliation? Retaliatory tariffs could lead to a more negative impact on Mexico’s economic activity and inflation.
