Mexico Faces US$122 Billion Impact Under Trump’s Proposed Tariffs

Mexico, the United States' largest trade partner, stands to be one of the most affected nations under US President Donald Trump’s proposed tariff policies. Up to US$122 billion worth of Mexican exports could be hit, affecting key sectors such as digital processing units, motor vehicles, and crude oil, reports PwC. These tariffs, set at 25% on all Mexican products, could disrupt supply chains, increase costs for US consumers, and strain trade relations between both countries.

According to a PwC analysis, Trump’s proposed tariffs would impact a broad range of industries, including: industrial products, consumer goods, automotive and aerospace, pharmaceuticals and life sciences, technology, media, telecommunications, energy and utilities, and private equity. Importers and multinational corporations must now assess how these sweeping changes will impact their operations and long-term strategic decisions.

Key Tariff Updates by Country

The most notable changes under Trump’s policy include steep tariff increases on key trade partners, particularly China, Mexico, and Canada:

• China: Up to 25% on most goods, 50% on certain classifications, and 100% on EVs. Furthermore, there will be an additional 20% of all products (including products from Hong Kong).

• Mexico: 25% on all products. These tariffs have been delayed until April 2 for goods covered by the USMCA, including automobiles.

• Canada: 25% on all products except energy. These tariffs have also been delayed until April 2 for goods covered by the USMCA, including automobiles. There is also a 10% tariff on energy or energy resources.

• Rest of the World: Subject to pending investigations under the "America First Trade Policy" and "Fair and Reciprocal Plan."

• All Locations: 

  • Steel and aluminum: A flat 25% tariff imposed on imports from all jurisdictions.

  • De minimis Import Entries: A proposed prohibition on tariff exemptions for certain low-value imports.

Top 10 Trade Partners Facing Tariff Increases

Among the biggest US trade partners, Mexico, China, and Canada face the steepest tariff hikes with the following estimated tariff increase:

• Mexico represents 15.8% of annual US imports, valued at US$122 billion, affecting digital processing units, motor vehicles, and crude oil.

• China represents 13.5% of annual US imports, valued at US$84 billion, affecting smartphones, lithium-ion batteries, and portable automatic data processing machines.

• Canada represents 12.5% of annual US imports, valued at US$96 billion, affecting crude oil, motor vehicles, and petrol oil.

• Germany represents 4.8% of annual US imports, valued at US$30 billion, affecting motor vehicles, immunological products, and medicines.

• Japan  represents 4.6% of annual US imports, valued at US$15 billion, affecting motor vehicles, machinery, and immunological products.

• Vietnam represents 4.5% of annual US imports, valued at US$21 billion, affecting portable automatic data processing machines and smartphones.

• South Korea  represents 4.1% of annual US imports, valued at US$18 billion, affecting motor vehicles, parts and accessories for machines, and oil (not crude).

• Taiwan represents 3.6% of annual US imports, valued at US$6 billion, affecting parts and accessories for machines, digital processing units, and electronic integrated circuits.

• Ireland represents 3% of annual US imports, valued at US$23 billion, affecting immunological products, medicines, and hormones.

• India represents 2.8% of annual US imports, valued at US$24 billion, affecting medicaments, diamonds, smartphones.

Financial, Economic Implications

PwC’s US Tariff Industry Analysis estimates that Trump’s proposed tariffs would have a disproportionate impact on previously non-dutiable goods, meaning products that historically entered the US duty-free under trade agreements. 

If the Trump administration’s proposals take effect, the status of FTAs with Canada and Mexico could be at risk, leading to additional tariffs on US imports. Currently, US$2.1 trillion of the US$3.1 trillion in imports enter duty-free, but this shift could subject the full amount to tariffs. The estimated annual tariff total would rise sharply from US$76 billion to US$697 billion, with US$424 billion coming from previously exempt goods. This would heavily impact US multinationals that rely on FTAs for supply chain efficiency, potentially disrupting their sourcing strategies.