Mexico’s peso (MXN) slumped for the fourth consecutive day, nearing its weakest point since mid-2022, thanks to US President Donald Trump’s new 25% tariffs on Mexican imports.
The Mexico peso declined nearly 1% in European trading, settling at 20.85 against the dollar. Volatility gauges spiked to a one-month high.
Mexico, which channels 80% of its exports to the US, faces mounting pressure. President Claudia Sheinbaum will address the nation later today from Mexico City, outlining her counter-strategy. The peso has tumbled 22% since April 2024, reflecting jitters over US trade policies and domestic political shifts.
Martes negro para México
Tengo una popularidad del 85% y un plan de la A a la Z. Serenidad, mis solines. @Claudiashein
Trump anuncia que no habrá pausa para México, los aranceles de 25% entrarán en vigor mañana. pic.twitter.com/jtFKQaKuxq
— José Díaz (@JJDiazMachuca) March 4, 2025Economic Fallout Looms
Bond market borrowing costs have dipped steadily as analysts brace for an economic slowdown, prompting expectations of deeper interest rate cuts by Mexico’s central bank.
A Monday poll from the bank slashed growth forecasts to 0.81% for 2025—down from January’s modest 1.00%. MUFG analyst Lee Hardman warns that prolonged tariffs could tip Mexico into recession, predicting a 5-10% peso drop if the duties stick.
Trump: "Tomorrow, tariffs — 25 percent on Canada and 25 percent on Mexico. And that'll start." pic.twitter.com/gSHwP5jCky
— Aaron Rupar (@atrupar) March 3, 2025Despite the peso’s slide, Hardman notes that Mexico’s peso decline remains tame compared to the tariff scale, which also hits Canada (whose dollar has shed 4% since Trump’s November win). “Markets seem optimistic these hikes won’t last, curbing major trade damage,” he says. But the clock’s ticking—sustained tariffs could spell trouble.
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