President Donald Trump has temporarily paused his planned 25% tariffs on all Mexican goods, which are now set to take effect on April 4. While Mexican economists warn that a prolonged tariff war could push the country into zero growth—or even a recession, U.S. political experts argue that such economic pressure could backfire. A struggling Mexico, they say, may be less willing—or less able—to cooperate with Trump’s mass deportation efforts.
“You can’t have both,” said Michael Montgomery, a Reagan-era U.S. diplomat turned political science professor. “Mass deportations need Mexico’s cooperation—you can bus people to Mexico, but the host country has to agree to accept them,” Montgomery told The Latin Times.
For Mexico to willingly accept thousands—or even millions—of repatriated immigrants, it needs both resources and an economy capable of providing jobs and opportunities for returning citizens.
However, Mexico’s economic outlook is already strained, with leading economists warning that Trump’s tariff threats have discouraged foreign investment.
Tariffs vs. Economic Stability: A Lose-Lose Situation?
A recent analysis by Banamex, one of Mexico’s largest banks, lowered Mexico’s GDP projections, citing economic uncertainty stemming from Trump’s tariff threats. The projections highlight the potential damage:
- If tariffs last 3–4 months, Mexico’s GDP could drop by 0.6%.
- If tariffs continue for a year, Mexico could face a moderate recession, with GDP shrinking by 2.4%.
Meanwhile, Mexico remains the most common country of origin for unauthorized immigrants in the U.S., according to the Pew Research Center. Of the 11 million undocumented immigrants in the U.S., around 4 million are Mexican. To successfully deport hundreds of thousands—or millions—of these individuals, Mexico must not only agree to receive them, but also, process them swiftly.
Trump’s Tariff Strategy: A Shift in Economic Policy?
Although Trump has framed the tariffs as a temporary measure to pressure Mexico into curbing drug trafficking and illegal immigration, some political observers—including Montgomery—believe this is part of a broader economic strategy.
“There is a stated intention of the Trump administration and its allies in Congress to reduce America’s reliance on the income tax to finance government and to increase the use of tariffs,” Montgomery said. “So there’s stuff going on with regard to tariffs that is not just tit-for-tat trade war stuff. It’s a desire to move on to tariffs.”
Meanwhile, Mexican President Claudia Sheinbaum has stepped up cooperation with the U.S., increasing border security, drug seizures, and repatriation services to demonstrate her government’s willingness to collaborate. Despite her efforts, skeptics question if they will be enough for Trump to back down tariffs before April 4.
“I don’t know if there’s anything Mexico could actually do that would appease Trump,” Montgomery said.
Mexico’s Trump Card
So far, Sheinbaum has maintained a diplomatic stance, stating that Mexico will not retaliate with counter-tariffs—yet. However, Montgomery notes that if she chooses to escalate, she has one powerful economic weapon at her disposal:
“She could say, ‘I don’t care that you exempted autos—I’m slapping tariffs on cars coming into Mexico.'”
According to Montgomery, such a move would upend the auto industry and create political blowback for Trump and the GOP in 2026. “Frames are made in Mexico, headliners are made in Canada. The industry is so integrated on a three-country basis that it had to be exempted from tariffs in order to function,” Montgomery explained.
If Sheinbaum were to slap tariffs, the North American auto industry would take a big hit, potentially affecting swing states like Michigan and Pennsylvania, where auto jobs are critical. Even Trump’s strongholds in the South—where auto manufacturing is key—could take a major economic hit.
“That would be the hardline position,” Montgomery said. “Obviously, it would hurt Mexico too, but I don’t think Sheinbaum has any other cards that could inflict enough pain on the U.S. to truly get their attention.”
Economic Risk vs. Political Survival
Despite the tough rhetoric, Montgomery believes Trump and Sheinbaum will ultimately find common ground to avoid a full-scale economic and diplomatic crisis.
Trump’s decision to delay tariffs after speaking with Sheinbaum suggests he may be open to negotiation. “There are no winners in a trade war,” Montgomery warned. “If Mexico goes into a recession, so does the U.S.”
Montgomery also pointed out that Republican control of Congress is directly tied to economic stability. With volatile markets, slowing job growth, and weakening GDP, a prolonged tariff war could become a major political liability for the GOP heading into the next elections.
At the same time, Trump’s recent comments suggest a shift in his messaging on the economy. In a Fox News interview, when asked about the risk of a recession due to tariffs, he reframed the situation as part of a necessary adjustment:
“There is a period of transition because what we’re doing is very big,” Trump said.
Pressed on recent stock market losses, he dismissed concerns of immediate disruption:
“There could be a little disruption. Look, what I have to do is build a strong country. You can’t really watch the stock market. If you look at China, they have a 100-year perspective. We go by quarters. And you can’t go by that.”
Originally published on Latin Times
