Former President Donald Trump announced a massive new 40% tariff on goods imported from Brazil. This decision represents a smaller piece of his larger strategy to use trade negotiations to influence their behavior. This decision is made all the more notable by the backdrop of rising tensions between the United States and its trading partners, including Mexico and Canada.
The new tariff on Brazilian products does include some surprising exceptions, letting some items escape unscathed. This selective approach to tariffs indicates a calculated tactic by Trump to influence trade dynamics while maintaining key supply lines. So far, Mexico has thus far resisted the temptation to retaliate against any tariffs Trump imposes on them, even with such a favorable economic backdrop.
Since April, goods that we import from Canada have been facing tariff rates that are very similar to Mexico. This alignment points to a joint opposition to trade with both North American neighbors. Trump has indicated that goods from Canada could face an additional 35% tariff following a deadline set for 12:01 a.m. ET.
Trump’s administration has emphasized the importance of Mexico as America’s largest trading partner, surpassing China in 2023. In reality, the United States depends on Mexico for the majority of its imports of many critical and non-critical goods such as automobiles, electronics, footwear, and apparel. The current tariffs on Mexican imports are already at an unprecedented 25%. Businesses can reduce this rate by meeting the requirements of the United States-Mexico-Canada Trade Agreement (USMCA) that Trump signed in his first term.
Trump has threatened to raise similar tariffs on imports from other countries. This alert applies to tens of countries, at different levels depending on their traded ties to the U.S. The broader impact of such dramatic increases would be felt in global markets and supply chains around the world.
Just this week, Trump had a phone call with Claudia Sheinbaum, the new leftist President of Mexico. He lauded their dialogue as useful and forward thinking.
“I have just concluded a telephone conversation with the President of Mexico, Claudia Sheinbaum, which was very successful in that, more and more, we are getting to know and understand each other,” – Donald Trump
Our brief, joint statement Expressing Support for the Tariff Pause shines a light on what now emerges as a key opportunity. This would lay the foundation for continued negotiation and cooperation from the U.S. and Mexico. Sheinbaum has already pledged to raise tariffs on U.S. exports. She’s said she would do this if Trump goes through with his threats to raise tariffs on Mexican imports.
“We will be talking to Mexico over the next 90 Days with the goal of signing a Trade Deal somewhere within the 90 Day period of time, or longer,” – Donald Trump
The announcement of a pause on higher tariffs that were set to take effect on Friday indicates a potential opportunity for negotiation and collaboration between the U.S. and Mexico. Sheinbaum has previously vowed to impose higher tariffs on American goods if Trump proceeds with further increases on Mexican imports.
