U.S. Tariffs: Trump’s “Plan B” Raises Uncertainty for Mexico and Rekindles the Debate Over the Exchange Rate and Investment
Former President Donald Trump’s tariff strategy in the United States is back on the radar for Mexican companies and financial markets—not only because of the litigation surrounding the International Emergency Economic Powers Act (IEEPA), but also because of the alternative path the White House has already outlined to preserve a large share of tariff revenue even if the Supreme Court restricts that tool. The proposal—circulated by economic officials—calls for immediately turning to Section 122 of the Trade Act to impose a temporary across-the-board tariff, and then relying on other executive authorities such as Sections 232 and 301.
For Mexico, the key issue isn’t just the legal outcome, but the signal of continuity: even with an adverse court ruling, trade policy could retain a restrictive tilt for months. Section 122 would allow duties for up to 150 days under the argument of balance-of-payments imbalances—a limited window, but one long enough to disrupt import schedules, inventory costs, and FX hedging decisions in highly integrated supply chains such as auto parts, electronics, medical equipment, and agribusiness.
In the short term, a broad U.S. tariff escalation tends to translate into greater financial volatility and heightened risk aversion toward emerging markets. In Mexico, that channel often shows up in the foreign-exchange market, with bouts of peso depreciation when demand for defensive assets rises. While the exchange rate is driven by multiple factors—rate differentials, trade flows, remittances, and positioning—the political-and-trade component can dominate during periods of elevated uncertainty.
Mexico’s export sector faces a paradox: on the one hand, nearshoring and regional integration have supported the narrative of Mexico as North America’s manufacturing platform; on the other, a more aggressive—or less predictable—tariff environment makes trade more expensive and raises compliance costs. Companies with cross-border operations often respond by adjusting logistics, renegotiating prices, or passing part of the impact on to consumers. However, when the tariff is broad and implemented quickly, flexibility shrinks and the risk of slowing investment or postponing expansions rises—especially for capital-intensive projects.
The underlying article notes that tariff revenues associated with the IEEPA have become more important in U.S. public finances, and that a temporary across-the-board tariff could replace a significant share of that revenue in the near term. For Mexico, the takeaway is that tariffs are no longer used solely as a negotiating tool, but also as a revenue source—making expectations of a rapid de-escalation more complicated. In that context, importers and exporters may choose to pull shipments forward or delay them, affecting monthly trade flows and creating distortions in foreign trade statistics.
The macroeconomic impact on Mexico will depend on sector coverage and on whether the duties are applied broadly or targeted by country/industry. Recent experience has shown that national-security measures (Section 232) can hit specific sectors—such as metals—with a direct impact on exports and regional employment. In parallel, use of Section 301 (unfair practices) opens the door to prolonged disputes and a heavier regulatory burden. In both cases, the risk is that investment becomes more expensive due to a higher cost of capital and the need for mitigation strategies (certifications, traceability, rules of origin, and customs compliance).
For Mexican economic policy, a tariff shock of this kind usually has two implications: first, it pushes companies to strengthen hedging and revisit contracts denominated in USD; second, it forces a recalibration of growth expectations and, by extension, revenue and spending projections. If uncertainty translates into lower export-oriented manufacturing output, the hit can be felt in states with a heavy industrial footprint. At the same time, a weaker peso typically raises the cost of imported inputs, with potential second-round effects on prices—though the magnitude depends on competition, pass-through, and the monetary stance of Banxico.
Looking ahead, the most relevant scenario for Mexico is the combination of litigation in U.S. courts, the possible substitution of legal bases to keep tariffs in place, and North America’s political-and-trade calendar. Operationally, the risk is that trade ends up being managed in “150-day windows,” followed by regulatory adjustments—complicating financial and logistics planning. Strategically, the opportunity is to speed up market diversification, deepen domestic linkages, and raise regional content, but those responses require time, investment, and regulatory certainty.
In short, even if the U.S. Court limits a tool like the IEEPA, the alternative legal architecture described by the Trump administration suggests tariff pressure could be sustained and continue to influence costs, investment, and Mexico’s exchange rate. The challenge for companies and authorities will be to manage volatility, strengthen trade compliance, and reduce supply-chain vulnerabilities—without assuming that a court ruling alone will eliminate the risk.
