Mexico President Calls for ‘Cool Heads’ as Trump Effortlessly Sinks Peso

The leftist president of Mexico is learning firsthand how President Donald Trump’s “Art of the Deal” technique works, and it’s already hitting the value of the country’s currency hard.

In November, President-elect Trump warned the leaders of both Mexico and Canada that they needed to do more to stem the flow of illegal migrants and fentanyl or he would impose a 25 percent tariff after taking office.

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” he posted on at the time. “Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem.”

🚨 🚨 🚨 pic.twitter.com/qwPmIpDqrQ

— Trump War Room (@TrumpWarRoom) November 25, 2024

At the time, Mexican President Claudia Sheinbaum clapped back, saying that her country could impose new tariffs too, Fox Business reported.

“One tariff will follow another and so on, until we put our common businesses at risk,” she said.

The problem with that line of thinking is that the U.S. had an over $150 billion trade deficit with Mexico in 2024, so the nation that will be hurt far more is Sheinbaum’s and Trump knows this.

If she thought he was bluffing in November, Trump reaffirmed his plans on his first day in office Monday, saying Feb. 1 is the date he’s looking at to impose the new tariffs.

President Trump: 25% tariffs on each of Canada and Mexico beginning February 1st. pic.twitter.com/ncfBmMI242

— Stephen Taylor (@stephen_taylor) January 21, 2025

Bloomberg reported the next day that the Mexican peso dropped 1.4 percent before trimming some of its lost value following Trump’s comments.

“The selloff, the worst in emerging markets, came a day after Trump said he would slap tariffs of as much as 25% on Mexico and Canada unless the US neighbors did more to clamp down on immigration,” the news outlet said.

“The peso, one of the most heavily traded emerging-market currencies, lost 18.5% against the greenback last year, and now trades around the lowest level since mid-2022 at 20.7 per dollar,” according to Bloomberg.

On Wednesday, after the peso’s precipitous one-day decline, Sheinbaum called for “cool heads” to prevail.

“It’s important to always keep a cool head and refer to signed agreements, beyond the discourse itself,” she told reporters during her regular conference, according to a translation by the Associated Press.

She appeared to be referring to the USMCA trade agreement negotiated during Trump’s first term. However, he is looking to renegotiate, particularly when it comes to automotive imports, The Wall Street Journal reported.

The Journal noted a review of the agreement is not due until 2026, but Trump could use a provision in the current agreement to impose tariffs based on a national security threat to the U.S., like unvetted migrants (including potential terrorists) and fentanyl.

During his presidential campaign, Trump often mentioned how the previous president of Mexico, Andrés Manuel López Obrador, positioned a total of 25,000 troops on the U.S.-Mexican border and his nation’s border with Guatemala to help stem the flow of migrants.

He did so under threat of tariffs in 2019.

Trump also instituted the “Remain in Mexico” policy, requiring those asylum claims to stay south of the border while their cases are reviewed.

The levels of migrants dropped drastically in the months that followed.

Something tells me a cool-headed decision Sheinbaum will be making soon is to follow Obrador’s lead and agree to Trump’s demands regarding stemming the flow of migrants and deadly drugs.

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