Puerto Vallarta, Mexico – The Mexican peso depreciated significantly against the US dollar following tariff threats from US President Donald Trump, sparking concern in financial markets. The peso fell by more than 1% against the dollar, reflecting market jitters over potential economic consequences.
The turbulence began after Trump suggested imposing tariffs on Mexico starting February 1, a move he indicated during an afternoon address. Though the president did not issue a signed decree, his remarks broke the brief calm that followed his first speech of his second presidential term.
Peso Volatility and Market Reactions
Earlier in the day on Monday, the peso experienced modest gains, trading at approximately 20.50 pesos per dollar—an appreciation of 1.42%. This initial strength was attributed to the absence of emphatic tariff-related announcements in Trump’s initial remarks. However, the optimism dissipated in the afternoon when his tariff threat emerged, causing the peso to slide to 20.74 pesos per dollar. This rate held steady as markets opened on Tuesday.
The Mexican peso emerged as the most depreciated currency among major global currencies during this period. Meanwhile, the US dollar index gained 0.54%, reflecting broader dollar strength amidst heightened uncertainty.
In response to the mounting unease, Mexican President Claudia Sheinbaum sought to reassure citizens and investors during a press conference on Tuesday morning. Emphasizing the importance of remaining calm, she vowed to defend national sovereignty and mitigate the economic impacts of Trump’s rhetoric.
Sheinbaum downplayed the immediate significance of Trump’s statements, underscoring that only signed decrees carry legal weight. “Beyond the speech itself, what counts, in the strict sense of the law, are the decrees signed by President Trump,” she stated.
When pressed further on the tariff threat, Sheinbaum reiterated that the focus should remain on tangible developments and emphasized the stability of the US-Mexico-Canada Agreement (T-MEC), which she assured is not currently under threat.
Trump’s tariff remarks add to an already complex economic landscape in Mexico. Investors are grappling with uncertainties surrounding local reforms passed in September, the anticipated secondary laws tied to energy reform, and questions about the economic team’s stability. Specifically, doubts persist regarding the tenure of Finance Secretary Rogelio Ramírez de la O and potential changes within Mexico’s central bank, Banxico.
Market analysts warn that continued volatility could erode investor confidence in Mexico’s financial stability, further pressuring the peso. Observers are now closely monitoring both the US administration’s actions and Mexico’s policy responses as the situation evolves.
With economic nerves fraying, stakeholders await clarity on whether Trump’s tariff threats will materialize or remain political posturing.
Puerto Vallarta, Mexico - The Mexican peso depreciated significantly against the US dollar following tariff threats from US President Donald Trump, sparking concern in financial markets. The peso fell by more than 1% against the dollar, reflecting market jitters over potential economic consequences.
