As Trump Nominees Back SNAP and Medicaid Work Requirements, Report Shows Harms
"They do not reliably increase employment, but they do kick people off essential benefits like food assistance and healthcare," said an expert at the Economic Policy Institute.
People shop for food in a Brooklyn neighborhood in New York City on October 16, 2023.
(Photo: Spencer Platt/Getty Images)
Jessica Corbett
Jan 24, 2025
COMMON DREAMS
After nominees for U.S. President Donald Trump's Cabinet this week endorsed work requirements for social safety net programs, an economic think tank released a Friday report detailing the policy's drawbacks.
"Work requirements for safety net programs are a punitive solution that solves no real problem," said Economic Policy Institute (EPI) economist and report author Hilary Wething in a statement about her new publication.
"They do not reliably increase employment, but they do kick people off essential benefits like food assistance and healthcare," she stressed. "If policymakers are genuinely concerned about improving access to work, they should support policies like affordable child- and eldercare."
"The existing safety net is too stingy and tilts too hard toward making benefits difficult to access."
EPI's report explains that recently, congressional Republicans—who now have a majority in both chambers—"have embraced proposals to ratchet up work requirements as conditions for the receipt of some federal government benefits. These proposals are clearly trying to exploit a vague, but pervasive, sense that some recipients of public support are gaming the system to get benefits that they do not need, as they could be earning money in the labor market to support themselves instead."
"However, a careful assessment of the current state of public benefit programs demonstrates that almost none of the alleged benefits of ratcheting up work requirements are economically significant, but that the potential costs of doing this could be large and fall on the most economically vulnerable," the document states. "The most targeted programs for more stringent work requirements are the Supplemental Nutrition Assistance Program (SNAP, popularly referred to as food stamps) and Medicaid, the health insurance program for low-income people."
"EPI has surveyed the research literature on work requirements and how they interact with these two programs in particular, and we find that the existing safety net is too stingy and tilts too hard toward making benefits difficult to access," the report continues. "Tightening eligibility by increasing work requirements for these programs will make this problem even worse with no tangible benefit in the form of higher levels of employment among low-income adults."
Wething found that work requirements generally target nonelderly adults without documented disabilities who don't have official dependents living in their homes, formally called "able-bodied adults without dependents" (ABAWDs).
"While ABAWDs might not have documented disabilities that result in benefit receipt or have dependent children living at home full-time, they often experience health challenges and must take on some caregiving duties, each of which could provide a genuine barrier to finding steady work," the report says. "We find that 21% reported having a disability that affects their ability to find and sustain work, suggesting that adults with genuine health barriers are being swept up in overly stringent work requirements."
Additionally, "13.8% of ABAWDs live with an adult over the age of 65 in their household, suggesting that many are potential caregivers in some form and likely have caregiving responsibilities beyond what is captured on paper," the document notes. "Despite ABAWDs having health challenges and caregiving responsibilities that make participation in the labor market difficult, our current social safety net does very little to support these adults."
The publication highlights that "low-income adults generally face steep labor market challenges, making it difficult to meet work requirements," including that "low-wage work is precarious, making work time hard to maintain."
The report also emphasizes that "by making the process of applying for crucial safety net programs more burdensome, work requirements effectively function like a cut to programs," and "the consequences of losing access to SNAP and Medicaid for low-income adults are severe, often resulting in food and health insecurity."
Despite the abundance of research about the downsides of work requirements, Brooke Rollins, Trump's nominee to lead the U.S. Department of Agriculture—which administers SNAP—expressed support for the policy during a Thursday Senate confirmation hearing, echoing what Russell Vought, the president's pick to direct the Office of Management and Budget, said about Medicaid on Wednesday.
Rather than pushing work requirements, the EPI report argues, decision-makers could advocate for "policies that would measurably improve employment in low-income households," including "macroeconomic policy to maintain full employment."
The publication also promotes policies that increase scheduling predictability, provide better help with caregiving responsibilities, assist formerly incarcerated people with finding and maintaining jobs, reduce unnecessary education mandates for employment, and improve transportation options. It further calls for reducing existing work requirements.
"It is entirely possible that reducing eligibility barriers to safety net programs—barriers like work requirements—may well be more effective in promoting work than raising those barriers would be," the report states. "A majority of adults who gained coverage through Medicaid expansion in Ohio and Michigan found that having healthcare made it easier to find and maintain work."
After nominees for U.S. President Donald Trump's Cabinet this week endorsed work requirements for social safety net programs, an economic think tank released a Friday report detailing the policy's drawbacks.
"Work requirements for safety net programs are a punitive solution that solves no real problem," said Economic Policy Institute (EPI) economist and report author Hilary Wething in a statement about her new publication.
"They do not reliably increase employment, but they do kick people off essential benefits like food assistance and healthcare," she stressed. "If policymakers are genuinely concerned about improving access to work, they should support policies like affordable child- and eldercare."
"The existing safety net is too stingy and tilts too hard toward making benefits difficult to access."
EPI's report explains that recently, congressional Republicans—who now have a majority in both chambers—"have embraced proposals to ratchet up work requirements as conditions for the receipt of some federal government benefits. These proposals are clearly trying to exploit a vague, but pervasive, sense that some recipients of public support are gaming the system to get benefits that they do not need, as they could be earning money in the labor market to support themselves instead."
"However, a careful assessment of the current state of public benefit programs demonstrates that almost none of the alleged benefits of ratcheting up work requirements are economically significant, but that the potential costs of doing this could be large and fall on the most economically vulnerable," the document states. "The most targeted programs for more stringent work requirements are the Supplemental Nutrition Assistance Program (SNAP, popularly referred to as food stamps) and Medicaid, the health insurance program for low-income people."
"EPI has surveyed the research literature on work requirements and how they interact with these two programs in particular, and we find that the existing safety net is too stingy and tilts too hard toward making benefits difficult to access," the report continues. "Tightening eligibility by increasing work requirements for these programs will make this problem even worse with no tangible benefit in the form of higher levels of employment among low-income adults."
Wething found that work requirements generally target nonelderly adults without documented disabilities who don't have official dependents living in their homes, formally called "able-bodied adults without dependents" (ABAWDs).
"While ABAWDs might not have documented disabilities that result in benefit receipt or have dependent children living at home full-time, they often experience health challenges and must take on some caregiving duties, each of which could provide a genuine barrier to finding steady work," the report says. "We find that 21% reported having a disability that affects their ability to find and sustain work, suggesting that adults with genuine health barriers are being swept up in overly stringent work requirements."
Additionally, "13.8% of ABAWDs live with an adult over the age of 65 in their household, suggesting that many are potential caregivers in some form and likely have caregiving responsibilities beyond what is captured on paper," the document notes. "Despite ABAWDs having health challenges and caregiving responsibilities that make participation in the labor market difficult, our current social safety net does very little to support these adults."
The publication highlights that "low-income adults generally face steep labor market challenges, making it difficult to meet work requirements," including that "low-wage work is precarious, making work time hard to maintain."
The report also emphasizes that "by making the process of applying for crucial safety net programs more burdensome, work requirements effectively function like a cut to programs," and "the consequences of losing access to SNAP and Medicaid for low-income adults are severe, often resulting in food and health insecurity."
Despite the abundance of research about the downsides of work requirements, Brooke Rollins, Trump's nominee to lead the U.S. Department of Agriculture—which administers SNAP—expressed support for the policy during a Thursday Senate confirmation hearing, echoing what Russell Vought, the president's pick to direct the Office of Management and Budget, said about Medicaid on Wednesday.
Rather than pushing work requirements, the EPI report argues, decision-makers could advocate for "policies that would measurably improve employment in low-income households," including "macroeconomic policy to maintain full employment."
The publication also promotes policies that increase scheduling predictability, provide better help with caregiving responsibilities, assist formerly incarcerated people with finding and maintaining jobs, reduce unnecessary education mandates for employment, and improve transportation options. It further calls for reducing existing work requirements.
"It is entirely possible that reducing eligibility barriers to safety net programs—barriers like work requirements—may well be more effective in promoting work than raising those barriers would be," the report states. "A majority of adults who gained coverage through Medicaid expansion in Ohio and Michigan found that having healthcare made it easier to find and maintain work."
Trump USDA Pick Backs Mass Deportations and 'Ready to Bow to Corporate Interests'
"As usual, President Trump appears more concerned with buoying business interests than reforming our broken system to deliver safe, affordable food," one advocate said.
President Donald Trump's pick for agriculture secretary Brooke Rollins speaks with the president during his first term in 2018.
(Photo: The White House Official YouTube Account)
Olivia Rosane
Jan 23, 2025
COMMON DREAMS
In her confirmation hearing before the U.S. Senate on Thursday, President Donald Trump's agriculture secretary nominee Brooke Rollins expressed support for the mass deportation of undocumented immigrants, work requirements for federal food aid, and a law that would prohibit states from passing independent regulations of agricultural products.
Her testimony sparked concern from food justice and sustainable agriculture advocates, who said her lack of agricultural experience and pro-corporate worldview would harm farmworkers, animals, public health, and families in need.
"Rollins, as secretary of agriculture, will be a serious setback for farmers, ranchers, and rural communities already burdened by extreme weather events; livestock disease outbreaks; challenges in accessing land, capital, and new markets; food insecure families who rely on federal assistance to reach their nutritional needs; and for small and family farms being squeezed out by powerful food and agriculture corporations," Nichelle Harriott, policy director at Health, Environment, Agriculture, Labor (HEAL) Food Alliance, said in a statement.
"Her history demonstrates a disregard for and lack of commitment to supporting Black, Indigenous, and other farmers and ranchers of color, as well as small and family farmers, farmworkers, and the working people who sustain our food system."
Rollins, who testified before the Senate Committee on Agriculture, Nutrition, and Forestry at 10:00 am Eastern Time on Thursday, was a surprise choice to lead the U.S. Department of Agriculture (USDA) for many agricultural groups as well as other members of the Trump team. While she grew up on a farm in Texas, participated in the 4-H and Future Farmers of America, and earned a bachelor's degree in agricultural development from Texas A&M University in 1994, her career diverged from the agricultural world once she graduated from the University of Texas School of Law. She worked for then-Texas Gov. Rick Perry, served under the first Trump administration in the White House Office of American Innovation and then as acting director of the U.S. Domestic Policy Council, and co-founded the right-wing America First Policy Institute think tank after 2020.
"Essentially, in more than three decades, Rollins has never had a job solely focused on food and agriculture policy," Karen Perry Stillerman, director in the Food and Environment Program at the Union of Concerned Scientists (UCS), wrote in a blog post ahead of Rollins' hearing.
One statement that particularly concerned food and agriculture justice campaigners was Rollins' support for the Ending Agricultural Trade Suppression (EATS) Act. This act would repeal California's Proposition 12, which bans the sale in the state of pork, veal, or eggs from animals "confined in a cruel manner." It would also prevent other states from passing similar laws and is backed by agribusiness lobby firms like the National Cattlemen's Beef Association, the National Pork Producers Council, and the Farm Bureau.
"Brooke Rollins is a well established Trump loyalist, ready to bow to corporate interests on Day One. Her endorsement of the EATS Act signals the dangerous pro-corporate agenda she appears ready to bring USDA, if confirmed to lead the key agency," Food & Water Watch senior food policy analyst Rebecca Wolf said in a statement.
"The USDA has massive leverage in shaping our food system, but, as usual, President Trump appears more concerned with buoying business interests than reforming our broken system to deliver safe, affordable food," Wolf continued. "Congress must stand up to Trump's corporate cronies and their dangerous legislation. That means stopping the EATS Act, which threatens to exacerbate consolidation in the agriculture sector and drive an archaic race to the bottom in which consumers, animals, and our environment lose out to enormous profit-grubbing corporations."
During the hearing, senators questioned Rollins on how her USDA would handle key aspects of Trump's agenda that are likely to impact farmers. His planned 25% tariffs on China, Mexico, and Canada could lead to retaliation from those countries that would block U.S. access to their markets, as happened with China in 2018.
Rollins said that the administration was prepared to give aid to farmers as it did during Trump's first term.
"What we've heard from our farmers and ranchers over and over again is they want to be able to do the work. They want to be able to export. They don't want to solve this problem by getting aid," Sen. Michael Bennet (D-Colo.) responded.
Rollins answered that she would also work to expand access to agricultural markets.
Sen. Dick Durbin (D-Ill.), meanwhile, raised the question of how Trump's USDA would respond to his plan to deport millions of undocumented immigrants, given that around 40% of U.S. farmworkers are undocumented.
"The president's vision of a secure border and a mass deportation at a scale that matters is something I support," Rollins answered. "My commitment is to help President Trump deploy his agenda in an effective way, while at the same time defending, if confirmed secretary of agriculture, our farmers and ranchers across this country... And so having both of those, which you may argue is in conflict, but having both of those is key priorities."
Another major policy area that Rollins would oversee as agriculture secretary is the Supplemental Nutrition Assistance Program (SNAP), formerly referred to as food stamps. SNAP makes up the bulk of federal spending in the Farm Bill, which has been delayed as Congress debates both nutrition and work requirements for the program, according toThe Texas Tribune. While most SNAP recipients are already required to work unless they have child- or eldercare responsibilities, lawmakers are debating stricter requirements.
Rollins told senators that she thought work requirements were "important."
In her pre-hearing article, UCS's Stillerman also expressed concerns about Rollins' history of climate denial and marriage to the president of an oil exploration company.
"In 2018, then-White House aide Rollins told participants at a right-wing energy conference that 'we know the research of CO2 being a pollutant is just not valid'—a perspective that is extreme even in the Trump era," she wrote.
Further, Stillerman noted Rollins' history of repeating "hateful and dangerous conspiracy theories," in particular about Democrats, left-wing organizations, and movements for women's and Black rights.
"Given her apparent antipathy for social justice movements, I have to wonder what Rollins thinks about the 66 recommendations made in early 2024 by the USDA Equity Commission to address a long history of racial discrimination and level the playing field for farmers of all kinds," Stillerman wrote.
After the hearing, Harriott of HEAL Food Alliance said: "Our food and farming communities deserve leadership that champions the needs of everyone, regardless of where we live or what we look like. The next secretary of agriculture must ensure that all farmers, ranchers, farmworkers, and food system workers have the resources they need to thrive."
"Unfortunately, despite her testimony today, Brooke Rollins lacks the agricultural expertise required to effectively lead the USDA. Her history demonstrates a disregard for and lack of commitment to supporting Black, Indigenous, and other farmers and ranchers of color, as well as small and family farmers, farmworkers, and the working people who sustain our food system," Harriott continued.
In the case that Rollins is confirmed, Harriott called on her to "prioritize disaster relief for farmers facing climate-related disruptions; invest in small farms and those practicing traditional, cultural, and ecological farming methods; ensure protections for food and farmworkers; and safeguard vital nutrition programs like SNAP to reduce hunger nationwide."
"As usual, President Trump appears more concerned with buoying business interests than reforming our broken system to deliver safe, affordable food," one advocate said.
President Donald Trump's pick for agriculture secretary Brooke Rollins speaks with the president during his first term in 2018.
(Photo: The White House Official YouTube Account)
Olivia Rosane
Jan 23, 2025
COMMON DREAMS
In her confirmation hearing before the U.S. Senate on Thursday, President Donald Trump's agriculture secretary nominee Brooke Rollins expressed support for the mass deportation of undocumented immigrants, work requirements for federal food aid, and a law that would prohibit states from passing independent regulations of agricultural products.
Her testimony sparked concern from food justice and sustainable agriculture advocates, who said her lack of agricultural experience and pro-corporate worldview would harm farmworkers, animals, public health, and families in need.
"Rollins, as secretary of agriculture, will be a serious setback for farmers, ranchers, and rural communities already burdened by extreme weather events; livestock disease outbreaks; challenges in accessing land, capital, and new markets; food insecure families who rely on federal assistance to reach their nutritional needs; and for small and family farms being squeezed out by powerful food and agriculture corporations," Nichelle Harriott, policy director at Health, Environment, Agriculture, Labor (HEAL) Food Alliance, said in a statement.
"Her history demonstrates a disregard for and lack of commitment to supporting Black, Indigenous, and other farmers and ranchers of color, as well as small and family farmers, farmworkers, and the working people who sustain our food system."
Rollins, who testified before the Senate Committee on Agriculture, Nutrition, and Forestry at 10:00 am Eastern Time on Thursday, was a surprise choice to lead the U.S. Department of Agriculture (USDA) for many agricultural groups as well as other members of the Trump team. While she grew up on a farm in Texas, participated in the 4-H and Future Farmers of America, and earned a bachelor's degree in agricultural development from Texas A&M University in 1994, her career diverged from the agricultural world once she graduated from the University of Texas School of Law. She worked for then-Texas Gov. Rick Perry, served under the first Trump administration in the White House Office of American Innovation and then as acting director of the U.S. Domestic Policy Council, and co-founded the right-wing America First Policy Institute think tank after 2020.
"Essentially, in more than three decades, Rollins has never had a job solely focused on food and agriculture policy," Karen Perry Stillerman, director in the Food and Environment Program at the Union of Concerned Scientists (UCS), wrote in a blog post ahead of Rollins' hearing.
One statement that particularly concerned food and agriculture justice campaigners was Rollins' support for the Ending Agricultural Trade Suppression (EATS) Act. This act would repeal California's Proposition 12, which bans the sale in the state of pork, veal, or eggs from animals "confined in a cruel manner." It would also prevent other states from passing similar laws and is backed by agribusiness lobby firms like the National Cattlemen's Beef Association, the National Pork Producers Council, and the Farm Bureau.
"Brooke Rollins is a well established Trump loyalist, ready to bow to corporate interests on Day One. Her endorsement of the EATS Act signals the dangerous pro-corporate agenda she appears ready to bring USDA, if confirmed to lead the key agency," Food & Water Watch senior food policy analyst Rebecca Wolf said in a statement.
"The USDA has massive leverage in shaping our food system, but, as usual, President Trump appears more concerned with buoying business interests than reforming our broken system to deliver safe, affordable food," Wolf continued. "Congress must stand up to Trump's corporate cronies and their dangerous legislation. That means stopping the EATS Act, which threatens to exacerbate consolidation in the agriculture sector and drive an archaic race to the bottom in which consumers, animals, and our environment lose out to enormous profit-grubbing corporations."
During the hearing, senators questioned Rollins on how her USDA would handle key aspects of Trump's agenda that are likely to impact farmers. His planned 25% tariffs on China, Mexico, and Canada could lead to retaliation from those countries that would block U.S. access to their markets, as happened with China in 2018.
Rollins said that the administration was prepared to give aid to farmers as it did during Trump's first term.
"What we've heard from our farmers and ranchers over and over again is they want to be able to do the work. They want to be able to export. They don't want to solve this problem by getting aid," Sen. Michael Bennet (D-Colo.) responded.
Rollins answered that she would also work to expand access to agricultural markets.
Sen. Dick Durbin (D-Ill.), meanwhile, raised the question of how Trump's USDA would respond to his plan to deport millions of undocumented immigrants, given that around 40% of U.S. farmworkers are undocumented.
"The president's vision of a secure border and a mass deportation at a scale that matters is something I support," Rollins answered. "My commitment is to help President Trump deploy his agenda in an effective way, while at the same time defending, if confirmed secretary of agriculture, our farmers and ranchers across this country... And so having both of those, which you may argue is in conflict, but having both of those is key priorities."
Another major policy area that Rollins would oversee as agriculture secretary is the Supplemental Nutrition Assistance Program (SNAP), formerly referred to as food stamps. SNAP makes up the bulk of federal spending in the Farm Bill, which has been delayed as Congress debates both nutrition and work requirements for the program, according toThe Texas Tribune. While most SNAP recipients are already required to work unless they have child- or eldercare responsibilities, lawmakers are debating stricter requirements.
Rollins told senators that she thought work requirements were "important."
In her pre-hearing article, UCS's Stillerman also expressed concerns about Rollins' history of climate denial and marriage to the president of an oil exploration company.
"In 2018, then-White House aide Rollins told participants at a right-wing energy conference that 'we know the research of CO2 being a pollutant is just not valid'—a perspective that is extreme even in the Trump era," she wrote.
Further, Stillerman noted Rollins' history of repeating "hateful and dangerous conspiracy theories," in particular about Democrats, left-wing organizations, and movements for women's and Black rights.
"Given her apparent antipathy for social justice movements, I have to wonder what Rollins thinks about the 66 recommendations made in early 2024 by the USDA Equity Commission to address a long history of racial discrimination and level the playing field for farmers of all kinds," Stillerman wrote.
After the hearing, Harriott of HEAL Food Alliance said: "Our food and farming communities deserve leadership that champions the needs of everyone, regardless of where we live or what we look like. The next secretary of agriculture must ensure that all farmers, ranchers, farmworkers, and food system workers have the resources they need to thrive."
"Unfortunately, despite her testimony today, Brooke Rollins lacks the agricultural expertise required to effectively lead the USDA. Her history demonstrates a disregard for and lack of commitment to supporting Black, Indigenous, and other farmers and ranchers of color, as well as small and family farmers, farmworkers, and the working people who sustain our food system," Harriott continued.
In the case that Rollins is confirmed, Harriott called on her to "prioritize disaster relief for farmers facing climate-related disruptions; invest in small farms and those practicing traditional, cultural, and ecological farming methods; ensure protections for food and farmworkers; and safeguard vital nutrition programs like SNAP to reduce hunger nationwide."
What would Trump tariffs mean for key trade partner Mexico?
By AFP
January 22, 2025
Trucks queue to enter the United States from Mexico
By AFP
January 22, 2025
Trucks queue to enter the United States from Mexico
- Copyright AFP/File Guillermo Arias
Yussel Gonzalez and Jean Arce
US President Donald Trump has threatened to slap a 25-percent tariff on Mexican goods on February 1, a move that analysts say would deal a heavy blow to Latin America’s second-largest economy.
Mexican President Claudia Sheinbaum called for “a cool head” in response to Trump’s trade and other policy announcements.
What would be the implications for Mexico if its biggest trading partner imposes tariffs?
– Would tariffs tip Mexico into recession? –
Mexico’s economy is “arguably the most vulnerable” to US trade protectionism, according to London-based consultancy firm Capital Economics.
Mexico replaced China in 2023 as the largest trading partner with the United States, which buys 83 percent of its exports.
The electronics and vehicle sectors would be particularly exposed to tariffs because half of their demand comes from the United States, Capital Economics said.
The vehicle sector alone generates five percent of Mexico’s national economic output, it noted.
The two sectors are also “the ones where US security concerns are high about Chinese tech entering the country.”
According to Oxford Economics, another advisory firm, US tariffs and expected Mexican retaliation would weaken the Mexican peso, drive up inflation and “could push Mexico into a technical recession.”
Tourism, however, could benefit if a weaker peso makes vacations in Mexico more attractive, analysts said.
– What leverage does Mexico have? –
Trump said that he was thinking of enacting the tariffs on February 1 because of their failure to stop illegal immigration and drug trafficking into the United States.
His threats are aimed at “exerting pressure and trying to obtain concessions,” according to former Mexican trade negotiator Kenneth Smith.
During his first term (2017-2021), Trump successfully used the threat of tariffs to pressure Mexico to reduce the number of Central American migrants arriving at the southern US border.
Arantza Alonso, an analyst at risk intelligence company Verisk Maplecroft, said that “by pushing back the imposition of tariffs until February 1, Trump is giving Mexico time to make concessions.”
Capital Economics thinks that cooperation on tackling flows of migrants and drugs could “be an effective bargaining chip to stave off tariffs.”
Buying more goods from the United States and fewer from China could also assuage the United States, it said.
Retaliatory agricultural tariffs that would hit Republican states like Texas, Nebraska, Iowa and the Dakotas in particular are another option, Alonso said.
– Is free trade deal dead? –
In theory, Mexico and Canada should be protected against US tariffs by a regional free trade agreement that was renegotiated under Trump.
“Imposing tariffs on all products violates the treaty,” said Diego Marroquin, an international trade expert at the Wilson Center, a Washington-based think tank.
The United States-Mexico-Canada Agreement (USMCA), which replaced the previous NAFTA accord on July 1, 2020, is due to be reviewed by July next year.
“This review now looks poised to become more of a full-fledged renegotiation as President Donald Trump seeks to leverage the discussions to reshape North American trade, migration, and security, as well as address China’s growing influence in regional supply chains,” Council on Foreign Relations experts Shannon K. O’Neil and Julia Huesa wrote in a briefing note.
According to the Mexican political risk consultancy EMPRA, signs that Trump wants an early renegotiation suggest that he does not plan to kill the USMCA.
“Trump remains committed to securing more favorable terms for the US, particularly with regard to the automobile industry,” it told clients.
Sheinbaum recently hailed the USMCA as “one of the best trade agreements in history” and “the only way we can compete with Asian countries, particularly China.”
She presented a plan to replace Chinese imports with domestically produced goods — an apparent bid to ease Washington’s concerns that Chinese companies want to use Mexico as a backdoor into the United States.
Yussel Gonzalez and Jean Arce
US President Donald Trump has threatened to slap a 25-percent tariff on Mexican goods on February 1, a move that analysts say would deal a heavy blow to Latin America’s second-largest economy.
Mexican President Claudia Sheinbaum called for “a cool head” in response to Trump’s trade and other policy announcements.
What would be the implications for Mexico if its biggest trading partner imposes tariffs?
– Would tariffs tip Mexico into recession? –
Mexico’s economy is “arguably the most vulnerable” to US trade protectionism, according to London-based consultancy firm Capital Economics.
Mexico replaced China in 2023 as the largest trading partner with the United States, which buys 83 percent of its exports.
The electronics and vehicle sectors would be particularly exposed to tariffs because half of their demand comes from the United States, Capital Economics said.
The vehicle sector alone generates five percent of Mexico’s national economic output, it noted.
The two sectors are also “the ones where US security concerns are high about Chinese tech entering the country.”
According to Oxford Economics, another advisory firm, US tariffs and expected Mexican retaliation would weaken the Mexican peso, drive up inflation and “could push Mexico into a technical recession.”
Tourism, however, could benefit if a weaker peso makes vacations in Mexico more attractive, analysts said.
– What leverage does Mexico have? –
Trump said that he was thinking of enacting the tariffs on February 1 because of their failure to stop illegal immigration and drug trafficking into the United States.
His threats are aimed at “exerting pressure and trying to obtain concessions,” according to former Mexican trade negotiator Kenneth Smith.
During his first term (2017-2021), Trump successfully used the threat of tariffs to pressure Mexico to reduce the number of Central American migrants arriving at the southern US border.
Arantza Alonso, an analyst at risk intelligence company Verisk Maplecroft, said that “by pushing back the imposition of tariffs until February 1, Trump is giving Mexico time to make concessions.”
Capital Economics thinks that cooperation on tackling flows of migrants and drugs could “be an effective bargaining chip to stave off tariffs.”
Buying more goods from the United States and fewer from China could also assuage the United States, it said.
Retaliatory agricultural tariffs that would hit Republican states like Texas, Nebraska, Iowa and the Dakotas in particular are another option, Alonso said.
– Is free trade deal dead? –
In theory, Mexico and Canada should be protected against US tariffs by a regional free trade agreement that was renegotiated under Trump.
“Imposing tariffs on all products violates the treaty,” said Diego Marroquin, an international trade expert at the Wilson Center, a Washington-based think tank.
The United States-Mexico-Canada Agreement (USMCA), which replaced the previous NAFTA accord on July 1, 2020, is due to be reviewed by July next year.
“This review now looks poised to become more of a full-fledged renegotiation as President Donald Trump seeks to leverage the discussions to reshape North American trade, migration, and security, as well as address China’s growing influence in regional supply chains,” Council on Foreign Relations experts Shannon K. O’Neil and Julia Huesa wrote in a briefing note.
According to the Mexican political risk consultancy EMPRA, signs that Trump wants an early renegotiation suggest that he does not plan to kill the USMCA.
“Trump remains committed to securing more favorable terms for the US, particularly with regard to the automobile industry,” it told clients.
Sheinbaum recently hailed the USMCA as “one of the best trade agreements in history” and “the only way we can compete with Asian countries, particularly China.”
She presented a plan to replace Chinese imports with domestically produced goods — an apparent bid to ease Washington’s concerns that Chinese companies want to use Mexico as a backdoor into the United States.
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