Bitcoin price today: gains to $120k, near record high on U.S. regulatory cheer
Investing.com -- Mexico’s economy is at risk of entering a recession following the implementation of new US tariffs, according to Capital Economics.
The 25% tariff on all US imports from Mexico, which took effect today, is expected to have a significant economic impact if it remains in place.
“If it stays in place, [the tariff] will knock Mexico’s economy into recession in the coming quarters,” Capital Economics analysts wrote.
They estimate that Mexico’s GDP could contract by 1% this year, marking a sharp reversal for the country’s economic outlook.
Unlike Canada and China, which are also facing higher tariffs from the US, Mexico has limited options to cushion the impact.
“Mexico’s government has no fiscal space to support the economy,” the analysts noted, highlighting the country’s constrained ability to respond with stimulus measures.
Even if the tariff is eventually lifted through a trade agreement, Capital Economics warns that the damage may already be done.
“The continued threat of US trade barriers will weigh on confidence and investment and drag on GDP growth,” they said. The persistent uncertainty over US-Mexico trade relations could deter businesses from making long-term investments, further pressuring economic activity.
The firm concluded: “Even if Mexico secures some form of tariff reprieve, the continuing threat of US trade barriers would continue to cast a dark cloud over the outlook.”