Mexico's Biggest Bank Predicts Zero Growth, Recession—Trump's Tariff Threats Labeled as Major Risk

A new report released by Banamex, one of Mexico's most established banks, predicts that the Mexican economy will not grow this year. The document cited the uncertainty caused by President Donald Trump's tariff threats as a key reason behind the bank's negative economic outlook for the country.

While the U.S. President paused the 25% tariffs on all Mexican products only two days after they went into effect, bank executives argue that the damage has already repelled investors and consumers alike, per Intolerancia Diario.

Zero Growth and Recession

The "short-lived" tariffs, expected to resume on April 2, led Banamex to lower Mexico's Gross Domestic Product (GDP) projections.

"Although, as we anticipated, tariffs lasted for only 2 days, we deteriorated our baseline scenario in the face of the increase in uncertainty and now estimate GDP growth at 0.0% for 2025," the report reads. A previous estimate predicted 0.2% economic growth in 2025.

The report also outlined several scenarios, predicting different economic consequences for the possible duration of Trump's promised tariffs, which are set to go back into effect on April 2.

If the tariffs remain in place for three to four months, Mexico's GDP is expected to decrease by 0.6%. In the case tariffs persist throughout the year, a moderate recession is projected, with GDP falling by 2.4%.

"For now, we believe the tariffs will be short-lived (lasting up to a month), as significant internal pressures will emerge during that time, and Trump will have already strengthened the credibility of his threats," the report reads.

Drop in Foreign and Domestic Investment

According to Banamex, Foreign Direct Investment (FDI) in Mexico is also expected to decline by almost $2 billion during the next year. From approximately $37 billion in 2024 to around $35 billion in 2025. Domestic investment is also anticipated to shrink by approximately 3%.

Future of Trump's Tariff Threats

During his presidential campaign, Trump promised to impose 25% tariffs on all Mexican imports. The tariffs, according to the President, are supposed to be a temporary sanction for Mexico's alleged failure to curb illegal immigration and drug trafficking into the United States.

On Thursday, Trump and Mexican President Claudia Sheinbaum spoke about their joint efforts to fight drug cartels and repatriate undocumented immigrants. During the call, Sheinbaum cited U.S. Customs and Border Protection (CBP) data indicating a significant decline in U.S. fentanyl seizures since she and Trump took office.

Following the call, Trump announced he would delay the tariffs. "This agreement is in effect until April 2," Trump shared via his Truth Social account.

"I did this as an accommodation and out of respect for President Sheinbaum. Our relationship has been a very good one, and we are working hard together on the border, both in terms of stopping illegal aliens from entering the United States and, likewise, stopping fentanyl," he added.