Mexico Central Bank Sounds Note of Caution on Trump Tariffs

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Mexico Central Bank Sounds Note of Caution on Trump Tariffs

Several members of Mexico’s central bank expressed concern about the inflationary impact of tariffs that could be imposed by US President-elect Donald Trump after he takes office on Jan. 20The Bank of Mexico headquarters in Mexico City.

The Bank of Mexico headquarters in Mexico City. 

Several members of Mexico’s central bank expressed concern about the inflationary impact of tariffs that could be imposed by US President-elect Donald Trump after he takes office on Jan. 20.

One member cited increasing risks “due to the threat of tariffs and other adverse policies from abroad,” while another said that there was “greater uncertainty and increasing risks to inflation, particularly those associated with the possible imposition of tariffs on Mexican exports to the United States, which would also have consequences on Mexico’s economic activity.” The US is Mexico’s No. 1 trading partner.It’s not the first time that the bank has been explicit that it is considering the potential implications. Governor Victoria Rodriguez told El Financiero news outlet that the result of new tariffs, which Trump reiterated this week he plans to impose on Mexico, could have mixed effects on inflation, given possible ramifications to the Mexican currency and to demand for Mexican goods.The minutes show that the balance of views within the central bank members didn’t change in a very significant way from the previous meeting, Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc. wrote in a note. 

“Three of the five directors are open to discussing accelerating the pace rate cuts (to -50bp), but the other two argue that the central bank should be cautious and not rush rate cuts given prevailing domestic and external risks,” he added.