Trump's Protectionist Policies Could Affect Major Mexican States

Donald Trump’s return to the White House could bring significant financial challenges for Mexico, particularly for states heavily reliant on trade, investment, and remittances, according to Fitch Ratings. Trump’s protectionist trade policies and the possibility of a USMCA renegotiation are expected to impact export-dependent states like Baja California, Coahuila, Chihuahua, Nuevo Leon, and Tamaulipas.

Trump’s proposed tariffs include a universal rate of up to 20% on imports, a targeted 60% tariff on Chinese goods, and a potential 25% tariff on Mexican goods tied to immigration concerns. Fitch Ratings warns that such measures would undermine the competitiveness of Mexican products in the US market, reducing tax revenue and payroll tax collections.

S&P Global Ratings highlights that a universal tariff could also accelerate US inflation in its first year and reduce GDP by 1%. Humberto Calzada, Chief Economist, Rankia Latam, cautions that Trump’s reshoring strategy — which aims to relocate US companies from Mexico back to American soi l— could slow trade, cut jobs, and diminish income and domestic consumption. Key states likely to be impacted by these reshoring efforts include Baja California, Mexico City, Nuevo Leon, and San Luis Potosi. However, Alejandro Padilla, Deputy Director of Economic Analysis, Banorte, points out that Mexico’s membership in the USMCA provides a buffer against some of these threats.

Stricter immigration policies under Trump’s administration could reduce remittance flows to states like Chiapas, Guerrero, Michoacan, Oaxaca, and Zacatecas. This would not only strain local economies but also diminish the quality of life for families dependent on remittances, forcing increased public spending to address growing social needs.