Donald Trump’s tariffs have not slowed down Mexican exports to the United States, as many predicted. On the contrary, in the first quarter of 2025, Mexico sold goods worth $131 billion, an unprecedented figure since records began, according to information from the U.S. Department of Commerce’s Census Bureau. That’s a whopping 9.6% increase on the $119.8 billion reported in the same period of 2024.
It was a similar story for Mexico’s imports from the US, which surged by 4.8% year on year to $84 billion. The result is that total trade between the two countries reached $215 billion in the first quarter, a historic record. After notching up a total value of $840 billion last year, the world’s largest bilateral trade relationship seemingly goes from strength to strength.
Mexico’s exports to the US surged in the first three months of this year despite the fact that since February 4 the Trump administration has imposed a 25% tariff on all Mexican export goods that are not covered by the USMCA trade deal, which is just under half of the total. Also, since March 12 the Trump administration has imposed a 25% tariff on Mexican exports of steel, aluminium and some derivatives of both metals, including canned beer.
Yet despite Trump’s tariffs, Mexico, like Canada and China, the US’ second and third largest trade partners, increased its earnings from exports sent to the US in the first quarter of 2025. But this is a trend that is unlikely to last, especially if the US enters recession.
In fact, trade between the US and fellow USMCA member Canada already fell sharply in March after the outgoing Trudeau government imposed retaliatory tariffs on the US — something Mexico’s Sheinbaum government has so far ruled out doing — which prompted further retaliatory tariffs from Trump. While Canada’s trade with the US slumped in March, its trade with other countries surged, reports Bloomberg:
The Trump administration’s duties on Canadian steel, aluminum, autos and other products, as well as Canada’s retaliatory levies on a range of American goods, led to a large pullback in activity between Canada and its largest trading partner in March. Exports to the US plunged 6.6%, the biggest drop in nearly five years, while imports fell 2.9%, Statistics Canada data showed Tuesday.
Exports to other countries jumped 24.8%, however, almost entirely offsetting the decline in outbound shipments to the US. Imports from other countries were also up 1%. As a result, Canada’s merchandise trade deficit with the world narrowed to C$506 million, down from C$1.4 billion in February and beating the C$1.6 billion shortfall expected in a Bloomberg survey of economists.
The country’s trade surplus with the US narrowed to C$8.4 billion, from C$10.8 billion in February.
Meanwhile, the US’ trade deficit with Mexico continues to grow, reaching $140.5 billion in the first quarter of 2025, according to the Census Bureau. This is all happening not just despite but in large part because of Trump’s tariffs.
Since Trump began tariffing the world, both consumers and businesses have been front-loading imports from countries subject to relatively lower tariffs, including Mexico, out of fear that the tariffs will spike again once Trump’s 90-day pause ends on July 9. Imports jumped 41.3% year over year in the first quarter, the largest rise since the third quarter of 2020, when economies began to emerge from the first lockdown. This explosion in pre-tariff imports has been identified as one of the main factors behind the US economy’s contraction in the first quarter.
Unfortunately for Mexico, the relief is likely to be short lived. As US businesses and consumers face rising prices and possible even supply shortages, consumption will inevitably fall. As Yves warns in her post Complacency, Denialism and the Risk of an Economic Trumpocalypse, given the scale of disruption and dislocations caused so far, not just by Trump’s tariffs but also DOGE and the immigration crackdown, “it’s hard to have a good picture of where things stand in in the US and where the bottom might be”:
That is not merely the result of information being retrospective in what looks to be a rapidly accelerating downswing, but also small businesses and/or intermediate goods producers taking the biggest hits, and they are generally not well studied.
But based on the tone of the press, discussions with people in the US, and a very recent and short trip to New York City,1 much, and arguably too much, of the US seems to be in summer of 1914 mode: cheerfully living in a sense of normalcy that is about to vanish permanently. To put it another way, if there was a sufficiently widespread appreciation of what was looming over the horizon, May 1 would have seen the launch of open-ended general strikes.
Trump really is well on his way to implementing a reactionary restructuring of the US and international economy. “The end of globalization” is too bloodless a formula to convey the severity of the dislocations that have only started to arrive.
Even in the vanishingly unlikely scenario that Trump were to abandon his tariff policies in the next week, the confusion and interruption of supplies will still have done considerable harm. The longer they remain in place, the more that damage, particularly small business closures and downsizings at small and bigger enterprises, will become permanent.
And that is bad news for the US’ largest trade partner, Mexico. As we’ve mentioned before, there are few more extreme examples of economic dependence than Mexico’s relationship with the US. Mexico ships more than 80% of its exports to its northern neighbour, many of which are produced by US companies based in Mexico. Those exports account for just over one-quarter of Mexico’s GDP, which is why many analysts identified Mexico as the most exposed large economy to Trump’s tariffs.
This was all made possible by NAFTA, of course, as a 2017 article in Le Monde Diplomatique’s Spanish edition neatly recounts (machine translated):
After the signing of NAFTA and the law on foreign investment that opened almost the entire Mexican economy (apart from the oil sector) to investors from the North, U.S. transnational corporations quickly established their domination in the neighbouring country. A phenomenon that the local elite welcomed with jubilation. President Ernesto Zedillo (1994-2000), while organizing the submission of his country’s productive fabric to the needs of the United States, forged the term “globophobia” to denigrate those who doubted the ability of free trade to guarantee the prosperity of Mexicans and to promote growth. Like most of the “neoscientists,” his colleagues and friends at the time, Zedillo had a doctorate in economics obtained in the United States.
His presidency, and before it that of Carlos Salinas de Gortari (1988-1994), were decisive for the reorganisation of the economy around one priority: exports. It was the second time that the country had been involved in such a project. But while the first time, under the presidency of Porfirio Díaz (1876-1880 and 1884-1911), it was based on minerals and agricultural products, the second experience has transformed Mexico into an exporter of manufactured products. With the help of the World Bank, the International Monetary Fund (IMF) and the Inter-American Development Bank, as well as with the unconditional support of the employers’ organizations and the national oligarchy, Salinas de Gortari and his acolytes remodeled the country.
Part of that remodelling involved Mexican smallholders being wiped out by the heavily subsidised US-grown beans, rice, and corn flooding the market. The entire network of small and medium-sized enterprises that came out of the industrialisation policy of the 1930s, deprived of financing, “proved incapable of coping with the foreign competition unleashed by Mexico’s entry into the General Agreement on Tariffs and Trade (GATT) in 1986, NAFTA and, later, the World Trade Organization (WTO) – which succeeded GATT – in 1995.”
The average wage recorded between 1988 and 2005 did not rise above 60-70% of its 1981 level. The result, inevitably, was a mass exodus of rural workers to the United States, some of whom are now on the sharp end of Trump’s anti-migrant policies. Others ended up working — and in many cases, dying — for the drug cartels.
In the first quarter of 2025, US-based Mexican workers lost 132,190 jobs, according to data from the Latin American and Caribbean Remittances Forum. This comes on the heels of an earlier decline in the fourth quarter of 2024.
Remittances — the money sent from migrant workers to their families back home — is a key source of income, particularly in those rural communities that bore the impact of NAFTA. Last year, Mexico received $63 billion in remittances, almost all from the US. That’s more than any country on the planet bar India, and is the equivalent of 3.7% of Mexico’s GDP.
The bad news for Mexico, as for many other countries in Latin America, is that remittances have begun falling in recent months, as Trump’s crackdown on migrant workers has intensified. The good (and rather unexpected) news is that the inflows began picking up again in March, increasing by 2.7% year over year to $5.15 billion, according to the Bank of Mexico.
As a result, the cumulative value of remittance income in the first three months of 2025 was $14.26 million dollars, which is slightly higher than the $14,083 million reported last year. In other words, this vital lifeline for so many Mexican families has so far weathered Trump’s immigration crackdown surprisingly well — presumably because the migrant workers who have held onto their jobs are sending more money than usual back home. But again, whether this trend continues depends on the vagaries and whims of the Trump administration.