US Tariffs Squeeze Mexican Peso, Heightening Trade Tensions

When the U.S. Slaps a 25% Tariff on Mexico, the Peso Takes a Dip – And It’s All About the Babies… (i.e., Trade)

Why the Peso Looks More Epidemic Than Ever

The US slapped a 25% tariff on Mexican goods, and the Mexican peso plunged past 20.8 per dollar yesterday – a fresh decline in 2025 that’s making investors gulp.

Fast‑Forward to the Numbers

Daily high hit an upward spike of 1.5%.
More than 80% of Mexico’s exports go straight to the U.S. – so the ripple is big.
Manufacturing shrank for the eighth straight month.
Business confidence took a U‑turn in February.

Trade Tension – The Cold War of Economics

When trade relations heat up, it’s not just the handshake that suffers; the whole economy can feel the burn. Mexico’s exporters are sitting on the edge of a cliff, because the U.S. wants a bigger share of Mexican goods for the next big thing.

Key Players in the Game

U.S. President Donald Trump declared “no room for negotiation.”
Canada isn’t sleeping either – a $107 billion tariff hit slapped on U.S. goods.
Mexico’s President Claudia Sheinbaum is calling a press conference to plan a counter‑strike.

Mexico’s “Retaliatory” Plan – Will It Work?

Sheinbaum is set to surface some counter‑tariffs by Sunday, possibly targeting U.S. products that hold strategic value. The hope? If we nail this, we can dodge a protracted trade war and keep the currency from going into the hole.

Why Investors Are Nervous

Trade confrontations could create serious consequences for economic stability.
The U.S. tariff link to the fight against fentanyl raises stakes.
Mexico’s Bank of Mexico plans a 50‑basis‑point normalization cycle, but the path is steep.

One Thought: Hit the Brakes, Not the Road

Balance is the name of the game. Mexico needs to protect its economy but also avoid a bigger showdown. The government’s next moves will be the real story to watch.