Mexico has responded to Donald Trump’s threats of tariffs with tough talk on Tuesday but a slide in the peso highlights just how vulnerable the Latin American nation is to a trade war with its northern neighbour.
Heavily dependent on US trade and investment, suffering a wave of drug-related bloodletting and ruled by a newly inaugurated president, Mexico faces a huge challenge in dealing with the US president-elect.
Trump’s tariff threat on Monday, which would in effect rip up the US’s free trade agreement with its southern neighbour and put a 25 per cent tariff on its exports, was enough to send the Mexican currency down 1.7 per cent against the dollar on Tuesday morning, meaning the peso has fallen almost 20 per cent since April.
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