What impact could a potential increased customs tariff of 25% have on Mexico, assuming all exports from Mexico into the U.S. will be affected similarly?

Let’s do some simple math. If the cost of goods sold is about 50% (+/- 10%), multiply that by 1.25 to reflect the increased cost under a 25% tariff. It could make these goods 10-15% more expensive for U.S. consumers.

That has the potential to result in significant inflation. Not good for U.S. economic growth since the price increases will not be considered GDP growth. What happens then? The U.S. administration, facing backlash over double-digit inflation rates, will call for the Federal Reserve to cut interest rates.

How will the markets for stock and crypto react? If we take goods that are pure imports from Mexico (no final manufacturing or assembly in Mexico), the price hike would be closer to 25%. I do not think significant price reductions are possible to reduce this burden unless manufacturers significantly reduce quality – a concern for consumers and a time lag on the entire market.

The consequences of such a burden would be evident immediately. Case in point: Consider recent events, when the US administration announced tariffs on Mexico and Canada and then postponed them the next day.