Business

How Trump tariff threats might plunge Mexico into recession and stoke immigration

Published

1 year ago

October 27, 2024

How Trump tariff threats might plunge Mexico into recession and stoke immigration

MEXICO CITY —

If former President Trump is reelected and follows through with his promise to slap new tariffs on all imports to the U.S., experts say much of the global economy could be upended. And few countries would be more vulnerable than Mexico.

The economy here is driven almost exclusively by trade, with 83% of exports sent north of the border.

Mexicans are watching the U.S. election anxiously, and bracing for a possible Trump victory over the Democratic nominee, Vice President Kalama Harris. Last week, the peso lost value after polling showed that the former president had taken a slight lead in several swing states.

Economists warn that even a small increase in tariffs on Mexico’s goods could lead to a rise in unemployment and poverty, and some say that could prompt more people to migrate to the United States.

“Even the threat of tariffs will create havoc,” said Juan Carlos Moreno-Brid, an economics professor at the National Autonomous University of Mexico. “It will further reduce Mexico’s long-term economic growth. And it could drive migration to the United States and Canada.”

A worker packages Little Tikes baby swings at the MGA Entertainment factory in Ciudad Juarez, Mexico.

(Bloomberg / Getty Images)

Few world economies are more tightly bound than those of the U.S. and Mexico.

In 2023, U.S. exports of goods and services to Mexico totaled $367 billion and imports from Mexico exceeded $529 billion, according to the U.S. Department of Commerce. Mexico is the United States’ largest trading partner, having overtaken China in 2021.

Trump, who has long complained about the exodus of manufacturing jobs from the U.S. to countries such as China and Mexico, says that tariffs will help lure factories back to the United States.

Economists, though, are largely skeptical of that claim. And there’s some evidence that higher tariffs enacted during his presidency have cost American jobs. Many warn that U.S. companies would end up absorbing much of the new taxes, a cost they would pass on to U.S. consumers.

Some economists predict a 20% tariff imposed by Trump would end up costing the average U.S. family $2,600 each year. Harris says it could be higher, adding nearly $4,000 a year to the typical household’s bills, an increase she calls a “Trump sales tax.”

It’s difficult to say exactly what new tariffs would mean for the U.S. and the rest of the world because Trump’s proposals keep changing.

He has vowed, at various points, to impose an across-the-board tax of 10% or 20% on all goods entering the U.S. He’s also threatened tariffs of 60% or higher on imports from China.

In an interview this month with Fox News, he threatened to impose an exorbitant tax on autos imported from Mexico. A big chunk of U.S.-Mexico trade involves cars and auto parts that are transported back and forth across the border for production and final assembly.

“All I’m doing is saying, I’ll put 200[%] or 500%, I don’t care,” Trump said. “I’ll put a number where they can’t sell one car.”

New tariffs could trigger global trade wars because countries would probably retaliate with their own taxes on U.S. imports, targeting in particular farm goods because of the politically sensitive nature of that sector. The International Monetary Fund predicts growth would decelerate worldwide.

Donald Trump gestures as he speaks with flags in the background

But countries such as Mexico, which relies heavily on exports for economic growth, would be especially affected.

The value of Mexico’s exports and imports amounts to almost 90% of the country’s gross domestic product, according to World Bank data. Economists warn that even a small increase in tariffs on goods destined to the U.S. poses serious risks for the economy.

“Under the worst-case scenario, the Mexican economy will fall into recession, the currency will depreciate, and inflation will rise,” reads a report released this month by the economic research firm Moody’s Analytics.

The mere threat of tariffs has already scared off foreign companies from investing in Mexico. Tesla, for example, announced that it was pausing plans to build a new factory in Mexico until after the election because of Trump’s vow to levy taxes against auto imports.

Trump appears willing to target individual companies doing business here, recently threatening 200% tariffs on John Deere if the tractor manufacturer moves production and jobs to Mexico.

“The threat of tariffs and the erratic nature in which Trump might deploy them doesn’t offer any investment certainty,” said Rodrigo Aguilera, an independent economist.

As president, Trump in 2018 imposed tariffs on steel from Mexico and other countries, prompting counter-tariffs on American farm goods and straining U.S.-Mexico relations.

He also threatened broader tariffs on all Mexican goods, but backed off after American business leaders complained that it would hurt them and his administration extracted a promise from Mexican authorities to do more to stop migrants from reaching the U.S. border.

Some Mexican officials have said they don’t believe Trump will follow through with his tariff threats, which aren’t popular in the U.S. and seen as counterproductive for the American economy.

Marcelo Ebrard, Mexico’s economy secretary, told journalists recently that he believes they are just a campaign tactic. “The United States economy is not a manufacturing economy,” Ebrard said. “And I’m sorry, but it will not be that way again.”

But others fear that Trump, if he wins a second presidency, will be more likely to take dramatic measures on an array of policies because it is likely he would be surrounded by more loyalists.

“Trump is not going to be moderated by more moderate conservatives,” said Pamela K. Starr, a professor of international relations at USC. “The second presidency, I think, will be Trump unleashed.”

Rodrigo Aguilera, an independent economist, said there is no doubt that Trump will “use a tariff threat to force Mexico to collaborate on something he wants, on migration policy or security policy.”

“Mexico,” he said, “will have to try to capitulate.”

If Trump enacts tariffs on Mexico, it would be in violation of the U.S.-Mexico-Canada Agreement, a 2020 treaty that replaced the Clinton-era North American Free Trade Agreement. The new treaty, which Trump helped negotiate, calls for generally no tariffs on trade on the North American continent. If the U.S. violated the agreement, Mexico would have permission to retaliate.

When they overlapped in office, Trump and former President Andrés Manuel López Obrador came to an unexpected detente. López Obrador said the two countries’ relationship was built on mutual respect, and famously called Trump “a friend.”

Many think such a relationship may be less likely with the country’s new president, Claudia Sheinbaum, and Trump, in part because he doesn’t have a good track record of working with female heads of state.

“She’s really smart and a woman, all things that Trump seems to find threatening,” Starr said.

Sheinbaum has largely refrained from commenting on Trump’s tariff threats, except to say that it is the U.S., as much as Mexico, that would suffer if they came to pass.

Free trade, she said recently, “is as important for the United States as it is for Mexico.”

Sheinbaum, who took office this month, inherited an economy that was already on shaky ground. The country faces its largest budget deficit since the 1980s. And while the social programs carried out by her predecessor helped lift some Mexicans from poverty, 36% of the population is still poor, with 7% living in extreme poverty.

Recent developments in domestic politics in Mexico have spooked some investors. Business groups have criticized an ongoing plan to overhaul Mexico’s justice system, which some say will undermine the independence of judges.

In Mexico and much of Latin America, poverty has a direct link to immigration. A severe recession in Mexico in the 1990s contributed to some 5 million Mexicans immigrating to the U.S.

Times staff writer Don Lee contributed to this report.

Business

Bay Area semiconductor testing company to lay off more than 200 workers

Published

6 hours ago

January 11, 2026

Press Room

Bay Area semiconductor testing company to lay off more than 200 workers

Semiconductor testing equipment company FormFactor is laying off more than 200 workers and closing manufacturing facilities as it seeks to cut costs after being hit by higher import taxes.

The Livermore, Calif.,-based company plans to shutter its Baldwin Park facility and cut 113 jobs there on Jan. 30, according to a layoff notice sent to the California Employment Development Department this week. Its facility in Carlsbad is scheduled to close in mid-December later this year, which will result in 107 job losses, according to an earlier notice.

Technicians, engineers, managers, assemblers and other workers are among those expected to lose their jobs, according to the notices.

The company offers semiconductor testing equipment, including probe cards, and other products. The industry has been benefiting from increased AI chip adoption and infrastructure spending.

FormFactor is among the employers that have been shedding workers amid more economic uncertainty.

Companies have cited various reasons for workforce reductions, including restructuring, closures, tariffs, market conditions and artificial intelligence, which can help automate repetitive tasks or generate text, images and code.

The tech industry — a key part of California’s economy — has been hit hard by job losses after the pandemic, which spurred more hiring, and amid the rise of AI tools that are reshaping its workforce.

As tech companies and startups compete fiercely to dominate the AI race, they’ve also cut middle management and other workers as they move faster to release more AI-powered products. They’re also investing billions of dollars into data centers that house computing equipment used to process the massive troves of information needed to train and maintain AI systems.

Companies such as chipmaker Nvidia and ChatGPT maker OpenAI have benefited from the AI boom, while legacy tech companies such as Intel are fighting to keep up.

FormFactor’s cuts are part of restructuring plans that “are intended to better align cost structure and support gross margin improvement to the Company’s target financial model,” the company said in a filing to the U.S. Securities and Exchange Commission this week.

The company plans to consolidate its facilities in Baldwin Park and Carlsbad, the filing said.

FormFactor didn’t respond to a request for comment.

FormFactor has been impacted by tariffs and seen its growth slow. The company employs more than 2,000 people and has been aiming to improve its profit margins.

In October, the company reported $202.7 million in third-quarter revenue, down 2.5% from the third quarter of fiscal 2024. The company’s net income was $15.7 million in the third quarter of 2025, down from $18.7 million in the same quarter of the previous year.

FormFactor’s stock has been up 16% since January, surpassing more than $67 per share on Friday.

Business

In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

Published

18 hours ago

January 10, 2026

Press Room

In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

Two people allegedly used $100 counterfeit bills at dozens of In-N-Out Burger restaurants in Southern California in a wide-reaching scam.

Glendale Police officials said in a statement Friday that 26-year-old Tatiyanna Foster of Long Beach was taken into custody last month. Another suspect, 24-year-old Auriona Lewis, also of Long Beach, was arrested in October.

Police released images of $100 bills used to purchase a $2.53 order of fries and a $5.93 order of a Flying Dutchman.

The Los Angeles County District Attorney’s Office charged Lewis with felony counterfeiting and grand theft in November.

Elizabeth Megan Lashley-Haynes, Lewis’s public defender, didn’t immediately respond to a request for comment.

Glendale police said that Lewis was arrested in Palmdale in an operation involving the U.S. Marshals Task Force. Foster is expected in court later this month, officials said.

”Lewis was found to be in possession of counterfeit bills matching those used in the Glendale incident, along with numerous gift cards and transaction receipts believed to be connected to similar fraudulent activity,” according to a police statement.

A representative for In-N-Out Burger told KTLA-TV that restaurants in Riverside, San Bernardino and San Diego counties were also targeted by the alleged scam.

“Their dedication and expertise resulted in the identification and apprehension of the suspects, helping to protect our business and our communities,” In-N-Out’s Chief Operations Officer Denny Warnick said. “We greatly value the support of law enforcement and appreciate the vital role they play in making our communities stronger and safer places to live.”

The company, opened in 1948 in Baldwin Park, has restaurants in nine states.

An Oakland location closed in 2024, with the owner blaming crime and slow police response times.

Company chief executive Lynsi Snyder announced last year that she planned to relocate her family to Tennessee, although the burger chain’s headquarters will remain in California.

Business

Newsom’s budget includes $200 million to make up for Trump’s canceled EV rebates, among other climate items

Published

1 day ago

January 10, 2026

Press Room

Newsom’s budget includes 0 million to make up for Trump’s canceled EV rebates, among other climate items

Gov. Gavin Newsom on Friday doubled down on California’s commitment to electric vehicles with proposed rebates intended to backfill federal tax credits canceled by the Trump administration.

The plan would allocate $200 million in one-time special funds for a new point-of-sale incentive program for light-duty zero-emissions vehicles. It was part of a sweeping $348.9-billion state budget proposal released Friday, which also included items to address air pollution and worsening wildfires, amid a projected $3-billion state deficit.

EVs have become a flashpoint in California’s battle against the Trump administration, which moved last year to repeal the state’s long-held authority to set strict tailpipe emission standards and eventually ban the sale of new gas powered cars.

Last year, Trump ended federal tax credits of up to $7,500 for EV customers that were part of President Biden’s 2022 Inflation Reduction Act. In September, his administration also let lapse federal authorization for California’s Clean Air Vehicle decal program, which allowed solo EV drivers to use carpool lanes.

“Despite federal interference, the governor maintains his commitment to protecting public health and achieving California’s world leading climate agenda,” Lindsay Buckley, spokesperson for the California Air Resources Board, said in an email. “This incentive program will help continue the state’s ZEV momentum, especially with the federal administration eliminating the federal EV tax credit and carpool lane access.”

Newsom had previously flip-flopped on this idea, first vowing to restore a state program that provided up to $7,500 to buy clean cars and then walking it back in September. That same month, a group of five automakers including Honda, Rivian, Hyundai, Volkswagen and Audi wrote a letter urging Newsom and state legislators to establish a $5,000 EV tax rebate to replace the lost federal incentives, Politico reported.

During his State of the State speech Thursday — one year after the devastating Palisades and Eaton fires in Los Angeles — Newsom said California “refuse[s] to be bystanders” while China and other nations take the lead on electric vehicles and the clean energy transition. He touted the state’s investments in solar, hydrogen, wind and nuclear power, as well as its recent move away from the use of any coal-fired power.

“We must continue our prudent fiscal management, funding our reserves, and continuing the investments Californians rely on, from education to public safety, all while preparing for Trump’s volatility outside our control,” the governor said in a statement. “This is what responsible governance looks like.”

Several environmental groups had been urging Newsom to invest more in clean air and clean vehicle programs, which they say are critical to the state’s ambitious goals for human health and the environment. Transportation is the largest source of climate and air pollution in California and is responsible for more than a third of global warming emissions, said Daniel Barad, Western states policy manager with the nonprofit Union of Concerned Scientists.

“As federal attacks threaten California’s authority to protect public health, incentives are more essential than ever to scale up clean cars and trucks,” Barad said. “The governor and legislative leaders must act now to fully fund zero-emission transportation and pursue new revenue to grow and sustain climate investments.”

Katelyn Roedner Sutter, California senior director with the nonprofit Environmental Defense Fund, called it “an essential step to save money for Californians, cut harmful pollution, spur innovation, and support the global competitiveness of our auto industry.”

While the budget proposal does not include significant new spending proposals, it contains other line items relating to climate and the environment. Among them are plans to continue implementing Proposition 4, the $10-billion climate bond approved by voters in 2024 for programs geared toward wildfire resilience, safe drinking water, flood management, extreme heat mitigation and other similar efforts.

Among $2.1 billion in climate bond investments proposed this year are $58 million for wildfire prevention and hazardous fuels reduction projects in vulnerable communities, and nearly $20 million to assist homeowners with defensible space to prevent fire. Water-related investments include $232 million for flood control projects and nearly $70 million to support repairs to existing or new water conveyance projects.

The proposal also lays out how to spend money from California’s signature cap-and-trade program, which sets limits on greenhouse gas emissions and allows large polluters to buy and sell unused emission allowances at quarterly auctions. State lawmakers last year voted to extend the program through 2045 and rename it cap-and-invest.

The spending plan includes a new tiered structure for cap-and-invest that first funds statutory obligations such as manufacturing tax exemptions, followed by $1 billion for the high speed rail project, $750 million to support the California Department of Forestry and Fire Protection, and finally secondary program funding such as affordable housing and low-carbon transit options.

But while some groups applauded the budget’s broad handling of climate issues, others criticized it for leaning too heavily on volatile funding sources for environmental priorities, such as special funds and one-time allocations.

The Sierra Club called the EV incentive program a crucial investment but said too many other items were left with “patchwork strategies that make long-term planning harder.”

“Just yesterday, the Governor acknowledged in his State of the State address that the climate risk is a financial risk. That is exactly why California needs climate investments that are stable and ongoing,” said Sierra Club director Miguel Miguel.

California Environmental Voters, meanwhile, stressed that the state should continue to work toward legislation that would hold oil and gas companies liable for damages caused by their emissions — a plan known as “Make Polluters Pay” that stalled last year amid fierce lobbying and industry pressure.

“Instead of asking families to absorb the costs, the Legislature must look seriously at holding polluters accountable for the harm they’ve caused,” said Shannon Olivieri Hovis, California Environmental Voters’ chief strategy officer.

Sarah Swig, Newsom’s senior advisor for climate, noted that the state’s budget plan came just days after Trump withdrew the United States from the United Nations Framework Convention on Climate Change, a major global treaty signed by nearly 200 countries with the aim of addressing global warming through coordinated international action.

“California is not slowing down on climate at a time when we continue to see attack after attack from the federal government, including as recently as this week with the Trump administration’s withdrawal from the UNFCCC,” Swig told reporters Friday. “California’s leadership has never mattered more.”