Mexican Peso Dips Slightly After Trump’s Tariff Threat Against Mexico
On Saturday, Trump threatened to slap a 30% tariff on Mexican goods, citing Mexico’s alleged failure to help combat the fentanyl crisis.
Quick overview
- The Mexican peso weakened against the U.S. dollar due to President Trump's threat of a 30% tariff on imports from Mexico.
- The exchange rate closed at 18.7293 pesos per dollar, marking a 0.46% depreciation from the previous Friday.
- Market reactions were muted as investors are becoming desensitized to tariff threats, with expectations that impacts may be softened by the USMCA trade agreement.
- Mexican President Claudia Sheinbaum expressed optimism about reaching an agreement with the U.S. on security and trade issues.
The Mexican peso weakened against the U.S. dollar at the start of the week, weighed down by fresh threats from President Donald Trump to impose a 30% tariff on imports from Mexico beginning August 1.
The exchange rate closed Monday at 18.7293 pesos per dollar, compared to 18.6444 on Friday, according to official data from Mexico’s central bank (Banxico). This marked a depreciation of 8.49 centavos, or 0.46% for the local currency.
During the session, the dollar traded in a range between 18.7797 and 18.6538 pesos. Meanwhile, the U.S. Dollar Index (DXY) — which measures the greenback against a basket of six major currencies — rose 0.26% to 98.10 points.
Trump Targets Mexico
On Saturday, Trump threatened to slap a 30% tariff on Mexican goods, citing Mexico’s alleged failure to help combat the U.S. fentanyl crisis and reduce the bilateral trade deficit.
Mexican President Claudia Sheinbaum responded on Monday, saying she expects to reach an agreement soon with the U.S. on security and trade issues. “We have a working group in place, and we hope to reach an agreement,” she said during a press conference.
Limited Impact on the Peso
Market reaction was relatively muted. Analysts noted that investors have become somewhat desensitized to Trump’s recurring tariff threats, and that any eventual impact may be softened by the protections offered under the USMCA trade agreement.
There is speculation that the proposed tariff simply adds 5 percentage points to the 25% tariff announced in March, which would limit its overall effect. Additionally, many believe the tariffs are unlikely to be fully enforced or broadly applied.
Despite starting the week with losses, the peso’s depreciation remains moderate, reflecting expectations that the proposed measures will be diluted through exemptions or negotiations aligned with USMCA provisions.
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