Mexican Central Bank Says US Trade Tariffs Can Undercut Economic Growth Outlook

Maya Averbuch

Thu, Apr 10, 2025, 10:01 AM 3 min read

(Bloomberg) -- Mexico cardinal slope members spot likelihood of a weaker system this twelvemonth owed successful portion to US tariff uncertainty, an outlook that incorporates greater chances of recession but tin assistance tame inflation.

Banco de Mexico’s committee members said commercialized tensions could lend to different downward revision of their maturation estimates, according to the minutes of the March 27 argumentation decision, erstwhile the slope lowered borrowing costs by 50 ground points to 9%. Members led by Governor Victoria Rodriguez signaled that they would proceed the easing process successful the adjacent term.

“Most members noted that risks associated with commercialized argumentation changes successful the United States would person some upward and downward repercussions for inflation. They pointed retired that, connected the 1 hand, determination is simply a greater anticipation of a further speech complaint depreciation and, connected the other, a greater hazard of a further economical weakening,” according to the minutes published Thursday.

Companies successful Mexico and Canada presently indispensable wage a 25% tariff connected exports that bash not comply with the escaped commercialized agreement, known arsenic the USMCA, and connected the non-US information of finished cars. US President Donald Trump’s planetary tariff rollout connected April 2 mostly spared Mexico and Canada, dissimilar dozens of different countries that are facing fees of 10%. China, which is Mexico’s No. 2 commercialized partner, is facing overmuch steeper levies from the US.

Members of Mexico’s cardinal bank, which is known arsenic Banxico, said long-lasting tariffs would weaken outer request and adhd to the anticipated weakness successful depletion and investment.

One committee subordinate suggested that, if tariffs were imposed, Mexican goods that had been destined for export primitively could beryllium sold successful the section marketplace and would trim inflationary pressures. Even so, others said the scope and timing of the changes are unknown.

“In the lawsuit of much adverse scenarios materializing, though these would person effects connected some sides of the balance, the downward bias for ostentation would prevail,” said a committee member, who added that “the effects of the uncertainty resulting from said argumentation truthful acold person already been reflected successful an further weakening of the economy.”

Banxico’s Cuts

The committee delivered 4 consecutive 25 basis-point cuts and past 2 successive half-point reductions since past year, continuing to bring the cardinal complaint down from its highest of 11.25%. Mexico’s economical outlook has worsened, with the cardinal slope lowering its 2025 GDP maturation expectations to 0.6%.

Services ostentation has been sticky, but some the header and the halfway fig person slowed successful caller months wrong the bank’s people of 3% with a tolerance scope of positive oregon minus a percent point. On Wednesday, information from the country’s statistic institute showed yearly ostentation edged up somewhat to 3.8% and halfway ostentation was 3.64%.