MEXICO CITY—Dealing with President Trump’s on-and-off tariffs (see below) can be exhausting enough if you’re only trying to buy a new gadget. But if you’re running a business outside the US that either sells into the US or hopes to, the problems go beyond painful price hikes.
“We are living through very interesting times,” Eduardo Ragasol, director of NielsenIQ Mexico, said in a fit of understatement through an interpreter at the start of a panel that opened the Electronics Home Mexico show here last week.
He expressed equanimity about the possible economic consequences of those tariffs. On one hand, Nielsen wasn’t yet seeing data showing sizable effects either way: “These haven’t yet affected this side of commerce.” On the other hand, Ragasol has faith in the market’s ability to work around tariff disruptions: “The supply chains will find their way to solve these restrictions.”
But two other executives at this conference, a tech trade show in its first year of operation, sounded more stressed. “There are two main aspects here,” said Mauricio Prazak, president of the Brazilian Institute of International Business Relations Development. “One is the direct impact of the tariffs and the costs of the transactions. The other thing, which is as huge as the financial impact, is the uncertainty.”
“This uncertainty is one of the worst things in the business world,” he added. “Because if you know the cost, you can plan ahead, you can structure your operation.”
Where Are the Americans?
Calling that uncertainty “even worse than the cost of the tariffs itself,” Prazak pointed to a meeting area on the small show floor and said his São Paulo-based organization had invited “many American buyers” to come to the trade fair to meet potential suppliers.
“At first, they were very excited to be here, especially to get in touch with Mexican producers and suppliers,” he said. “But as soon as the tariffs started to happen, they all took a step back.”
The result: “We have buyers from every country in Latin America, but none American.”
The CEO of a Mexican manufacturer of small appliances called Trump’s tariffs a threat to his ambitions to sell into the US and compete with Chinese manufacturers.
“We want to introduce our own brand,” said Taurus CEO Guillermo Freyria, standing in front of an array of blenders, juicers, coffee makers, toasters, fans, and other household gadgets. He described Mexican labor as “efficient, sufficient, and cheaper than China.”
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He also accused Chinese companies of circumventing US tariffs. “China is sending the product to Indonesia, putting on labels, and sending it back to the USA,” Freyria said. Shadow ownership of Mexican firms is a problem too, he continued: “They are thinking of ways that they don’t appear even in the company shareholders.”
‘The US Is Becoming Isolated’
Prazak saw a different risk related to China: unilateral US actions opening up more market opportunities to that country’s manufacturers.
“As soon as the United States starts to get away from China, China starts to get closer to other regions,” he said. “They are growing their share in other regions of the world. They’re not losing anything, but the United States is becoming isolated with all of this.”
Prazak, however, was not ready to predict a permanent rupture between the US and its neighbors to the south. “Our feeling is maybe, whenever we end this administration, things will be back to normal,” he said. “I don’t think the United States will stop being the number one intention” of Latin American businesses.
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Both executives were more than ready to predict that Trump’s preferred outcome—a return to manufacturing consumer gadgets in the United States—was not going to happen anytime soon.
“I don’t see that America can produce blenders,” Freyria said.
Prazak alluded to the long time it’s taken for Apple’s iPhone contract manufacturer Foxconn to start making iPhones at scale in his country. “I don’t think this is something that can happen in a short period of time, and for your administration it is a short period of time.”
The State of Things
To recap the last few months of up-and-down news in tariffs covering US imports from Mexico:
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Feb. 1: Trump announces 25% tariffs on imports from Mexico, citing the volume of fentanyl coming from that country. (He did the same for Canada, even though no remotely comparable fentanyl-trafficking problem exists on that border.)
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Feb. 3: Trump announces a 30-day pause on those tariffs after those two countries pledge to redouble their efforts.
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March 5: Trump pushes back tariffs on imported autos for another 30 days.
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March 6: Trump announces another pause on tariffs on Canada and Mexico.
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April 2: On “Liberation Day,” Trump announces a base tariff of 10% on imports from everywhere and much higher, country-specific rates that exclude Mexico and Canada.
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May 28: The US Court of International Trade rules that Trump exceeded his authority and ordered the administration to drop almost all of these tariffs within 10 days. The next day, the US Court of Appeals for the Federal Circuit issues a stay that leaves them in effect.
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June 4: Trump announces a doubling in the tariff on imported steel from 25% to 50%
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June 13: The Commerce Department says it will apply that levy to the steel component of larger appliances, many of which are manufactured in Mexico.
(Reminders: The US has a free-trade agreement with Canada and Mexico that the first Trump administration took pride in renegotiating and renaming; the US Constitution reserves the power of taxation to Congress; and Republican majorities in Congress have not objected to Trump exploiting the limited authority granted to presidents under the 1977-vintage International Emergency Economic Powers Act.)
Disclosure: I traveled here with a group of other North American journalists as guests of the show’s organizers, who covered our travel expenses.
About Rob Pegoraro
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