Mexican Peso Weakens After Trump’s Tariffs Take Effect
The Mexican peso depreciated against the U.S. dollar on Tuesday, following the implementation of U.S. tariffs on imports from Mexico and Canada, along with an increase in tariffs on Chinese goods.
The exchange rate closed at 20.7431 pesos per dollar, down from 20.7176 in the previous session, according to official data from Banco de México (Banxico). This represents a loss of 2.55 cents, or 0.12%.
The dollar traded within a range, hitting a high of 20.9999 and a low of 20.6341. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, fell 0.84% to 105.66 points.
Awaiting Mexico’s Response
U.S. President Donald Trump followed through on his 25% tariff threat on Mexican and Canadian goods, while also doubling tariffs on Chinese imports to 20%. Markets are now closely watching how Mexican President Claudia Sheinbaum will respond.
In her morning press conference, Sheinbaum Pardo announced that the government’s response, including both tariff and non-tariff measures, will be revealed on Sunday. Canada and China reacted immediately to Trump’s actions with trade countermeasures.
“We have decided to respond with both tariff and non-tariff measures, which I will announce on Sunday,” Sheinbaum stated. “There is no reason, justification, or basis for Trump’s decision, which will negatively impact our people and nations.”
Market Fallout: Everyone Loses
Following the tariff announcement, both the Mexican peso and the Canadian dollar declined, with the peso touching its lowest levels since 2022 before later recovering some ground. Meanwhile, the U.S. dollar also weakened, falling alongside Treasury yields.
Analysts attributed the dollar’s drop to risk aversion and concerns over potential economic pressure. Expectations for Federal Reserve rate cuts have increased, with projections now suggesting three rate cuts instead of two due to potential economic weakness.
Despite the peso’s recovery, Mexico’s heavy reliance on trade—with nearly 80% of its exports going to the U.S.—could mean further pressure ahead.
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