The Trump administration’s imposition of 25 percent tariffs on Tuesday against Mexico and Canada is immediately disrupting Latin America’s second largest economy and threatening to plunge Mexico into a historic political crisis.
Mexican President Claudia Sheinbaum has moved from declaring “we don’t want tariffs” to “we don’t want a trade war,” while repeating the same appeal for “calm” that she has maintained since Trump signed the executive order on February 1 to begin the tariffs. At the time, the deadline was pushed back a month after both Canada and Mexico agreed to concessions, including the militarization of their borders with the United States and suppressing migrant arrivals down to a trickle.
Sheinbaum postponed any announcement of Mexico’s response to the imposition of the tariffs until Sunday, placing her hopes on being able to work out a deal in a phone call with Trump, tentatively set for Thursday.
For Sunday, Sheinbaum has convoked a mass rally with the participation of all governors in the Zócalo, the main plaza in Mexico City, “to face this united, because this goes beyond political parties.” If a deal is not reached with Trump beforehand, she plans to announce a set of tariff and non-tariff reprisals. “This is an issue that confronts the country,” she concluded during the press briefing Tuesday.
In partnership with the main business group, the Consejo Coordinador Empresaria, Walmart and other corporations, Economy Minister Marcelo Ebrard launched in mid-February a campaign to buy “Made in Mexico” products.
As noted by the New York Times, private companies have paid for advertisements like “one featuring the president leading the masses and carrying a banner saying ‘Mexico united, never defeated!’” The Times cites former opposition legislator Agustin Barrios Gómez, who argues that “right now, Mexico’s national interest—beyond party politics—is to rally around our president.”
But Sheinbaum’s hopes that greater collaboration with the US on security and immigration will satisfy the White House are a fantasy.
Last week, the Mexican government even broke its own Constitution by handing over 29 suspected cartel members as a political gift to the Trump administration. Given that US officials had expressed interest in executing such suspects, Mexican legal experts have labeled the decision as “unique” in Mexican history and illegal since the Mexican constitution bars the death penalty in extraditions.
As made clear by the imposition of the tariffs, any temporary deal reached in the 13th hour, like the one in early February, will only embolden the fascist ruling clique in Washington.
Trump has already launched a trade war, whose closest historical parallel lies in similar trade restrictions implemented by Nazi Germany and fascist Italy to achieve “self-sufficiency” ahead of World War II in the 1930s. The Trump administration is pursuing a definite “fortress America” strategy of securing its hegemony and a level of “self-sufficiency” across the Western Hemisphere in preparation for war with China and is not interested in negotiating anything short of the transformation of Mexico into a US semi-colony.
Trump has previously threatened to use military force to take control of the Panama Canal and overthrow the Venezuelan government, which is allied with China and Russia. Last week, the US government announced plans to lift all licenses to trade Venezuelan oil, which would fatally undermine the Venezuelan economy.
Last weekend, the Wall Street Journal revealed that US Defense Secretary Pete Hegseth told Mexican generals that the Pentagon would take “unilateral measures” if they did not stop the Mexican government’s “collusion” with the drug cartels. According to anonymous sources cited by the Journal, the Mexican authorities interpreted this as a threat of a military operation inside Mexico. When asked specifically, Hegseth and Trump have both refused to discard military actions in Mexico.
Sheinbaum’s efforts to minimize the potential economic effects of Trump’s tariffs are also a fraud. “The Mexican economy is strong” and can withstand the tariffs, she stressed on Tuesday.
The Mexican currency already fell sharply on Tuesday to 21 pesos per dollar, its lowest level in a month. The trade war has thrown a wrench into three years of “nearshoring” and higher than usual economic growth.
Gabriela Siller Pagaza, analyst at BASE group, explained that, given that 83 percent of Mexican exports go to the United States and that 26.7 percent of GDP depends on this trade, Mexico is likely headed into a recession. Siller warned of a sharp currency devaluation, higher inflation, capital flight and mass layoffs.
The Mexican economy is highly dependent on the just-in-time manufacturing model and free movement of inputs and finished goods across borders within the framework of the US, Mexico, Canada (USMCA) free trade agreement, which Trump has now unilaterally suspended. Several industry analysts have warned that auto supply chains, Mexico’s main export, could shut down within days.
By the end of 2024, however, Mexico’s economic growth had pretty much ground to a halt as a result of reduced government spending, Mexico’s own trade war policies against China to win favor with Washington, and the overall slowdown of the world economy.
Sheinbaum dedicated much of her election campaign last year making assurances to Wall Street that she would aggressively cut the government budget deficit while offering even more tax incentives to corporations. Moreover, she guaranteed the military the continued expansion of its resources and power.
These promises to the ruling class and the state, which are the only ones that remain in times of crises under capitalism, imply the elimination of the limited social spending increases that cut poverty levels during the previous administration of Andrés Manuel López Obrador. These were tolerated by the ruling class only thanks to the higher investment levels.
The Mexican ruling elite’s rallying around the flag and around Sheinbaum personally is the clearest indication that it is preparing unprecedented cuts to wages, labor rights, healthcare, education and social programs to make the working class pay for the effects of the expected economic turmoil. These policies cannot be implemented without a turn to the fascistic forms of repression that the Mexican military is historically known for.
Sheinbaum’s calls for national strength and unity are chiefly aimed not at confronting Trump and his cabal. Rather, in the name of “sovereignty,” the Mexican working class will be asked to sacrifice its social and democratic rights to safeguard the fortunes of Mexico’s billionaires, who multiplied their wealth under López Obrador, Sheinbaum’s mentor.
General Motors, Mexico’s top exporter, has already used the trade war as an excuse to reject a proposal by the so-called “independent union” SINTTIA at the Silao factory for a moderate wage increase.
The response by SINTTIA, however, has been as complacent and deliberately aimed at disarming workers as Sheinbaum’s. Before the first tariff deadline of February 1, SINTTIA chief Alejandra Morales Reynoso called on workers not to be worried about tariff threats since there is “no official evidence whatsoever” that they will be imposed, and that production will not be moved to the United States since wages there are too high to make it profitable. This can only mean that the union will enforce cheap labor and wage suppression on the basis of “saving jobs.”
However, in January, General Motors fired 850 workers at the Ramos Arizpe, Coahuila plant as it ended production of the SUV Prologue EV model. While the union at the plant belongs to the gangster-ridden Confederation of Mexican Workers (CTM), no section of the union bureaucracy, including the SINTTIA and its close allies in the AFL-CIO and Canadian Unifor, moved a finger to alert workers internationally and organize a fight against these layoffs.
The jobs, livelihoods and lives of workers across Mexico and the region can be defended against Trump’s trade war and threats of a military incursion only by the rank-and-file workers themselves, who must establish truly independent committees, direct links of communication and an international strategy as part of the International Workers Alliance of Rank-and-File Committees. This in turn requires the building of a socialist leadership in the Mexican, US and Canadian working class to lead the overthrow of the root cause of the danger of fascism and war: the global system of capitalist exploitation.