Puerto Vallarta, Mexico – The Mexican peso experienced a significant depreciation on Wednesday, January 8, following threats from U.S. President-elect Donald Trump regarding tariffs on Mexican exports. As a result, the exchange rate climbed to 20.46 pesos per dollar, marking a 0.67 percent drop in value, Bloomberg reported. This represents an increase of 17 cents compared to Tuesday’s closing rate of 20.29 pesos per dollar.
Trump’s Tariff Threats and Accusations
During an extensive press conference at his Mar-a-Lago residence, Trump reiterated his plan to impose 25 percent tariffs on Mexican exports, citing concerns over security and governance in Mexico. The president-elect accused Mexico of being “essentially run by drug cartels,” describing the nation as “a very dangerous place” with numerous problems.
In response to Trump’s remarks, President Claudia Sheinbaum addressed the issue during her morning press conference, emphasizing that “in Mexico, the people govern.”
Trump’s contentious statements extended beyond tariffs. Without detailing a concrete plan, he also proposed renaming the Gulf of Mexico to the “U.S. Gulf.”
Economic Impact of Tariff Implementation
According to the Economic Commission for Latin America and the Caribbean (ECLAC), a 10 percent tariff imposed by the United States could lead to a contraction of up to 1 percent in Mexico’s Gross Domestic Product (GDP) by 2025. ECLAC’s executive secretary, José Manuel Salazar Xirinachs, noted that any increase in tariff percentages would exacerbate the economic impact.
Mexico’s primary exports to the United States include:
- Machines and data processing units
- Motor vehicle parts and accessories
- Automobiles and other vehicles for personal transportation
- Motor vehicles for the transport of goods
- Electrical cables and wires
- Medical science instruments and apparatus
- Tractors for agricultural use
- Phones and wireless devices
- Machine parts and accessories
- Air conditioning machinery
Dollar Exchange Rates and Market Reactions
On January 8, the selling price of the U.S. dollar at Citibanamex reached 20.98 pesos, while the buying price stood at 19.77 pesos per dollar.
The U.S. dollar index (DXY), which tracks the value of the dollar against a basket of six major currencies, rose by 0.53 percent to 109.12 points. Similarly, the Bloomberg dollar index (BBDXY) gained 0.44 percent, reaching 1,312.21 units.
In the bond market, Mexico’s 10-year Mbono yield stood at 10.38 percent, compared to the 10-year U.S. Treasury yield of 4.62 percent.
Outlook and Future Developments
As tensions escalate between the United States and Mexico, analysts warn that further rhetoric and potential trade measures from the incoming Trump administration could lead to increased volatility in the peso and broader economic uncertainty for Mexico.
Markets are expected to closely monitor developments in the lead-up to Trump’s inauguration, with investors bracing for potential shifts in trade policies that could reshape economic relations between the two nations.
Puerto Vallarta, Mexico - The Mexican peso experienced a significant depreciation on Wednesday, January 8, following threats from U.S. President-elect Donald Trump regarding tariffs on Mexican exports. As a result, the exchange rate climbed to 20.46 pesos per dollar, marking a 0.67 percent drop in value, Bloomberg reported. This represents an increase of 17 cents compared to Tuesday’s closing rate of 20.29 pesos per dollar.
