Mexican companies hold back U.S.-bound exports, hoping for tariff reversal

The flow of Mexican goods exported to the United States has slowed as companies anxiously hold back stock and wait to see if U.S. President Donald Trump might reverse his decision to implement 25% tariffs on Mexico this week.

On Tuesday, the first day of the across-the-board tariffs on Mexican goods, exports to the U.S. dropped some 40% in Ciudad Juarez, a manufacturing powerhouse across from El Paso, Texas, according to Marcelo Vazquez, the state representative of Mexico's National Association of Importers and Exporters (ANIERM).

That represents some $100 million in Mexican goods held back from being sent across the border, he added.

"The movement of these products has been stopped with the hope that one day, one day soon... there will be an agreement to lift the tariffs on these goods," Vazquez told Reuters.

"The merchandise is just stranded here, as (companies) are waiting for the tariffs to be readjusted."

Trump imposed tariffs this week not only on Mexico but also on Canada, along with fresh duties on Chinese goods, sparking trade wars that could send prices soaring in the United States and tip the Mexican economy into recession.

Trump's tariffs mark a turning point in U.S.-Mexico relations and more than 30 years of economic integration between the two countries. Both countries are each other's top trading partners on products ranging from avocados to the automobile sector.

Trump and Mexican President Claudia Sheinbaum are slated to speak by telephone on Thursday. Many companies in Ciudad Juarez that have held back some exports are hoping a tariff reprieve may be announced following the call, Vazquez said.

In many ways, Ciudad Juarez embodies the decades-long economic integration of the U.S. and Mexico, with the city's manufacturing sector teeming with factories that produce everything from auto parts to medical devices specifically for export to the U.S.

But if the tariffs are here to stay, the city's economy may be forced to pivot away from its northern neighbor, said Mario Cepeda, the local representative for the National Mexican Employers' Confederation (COPARMEX).

He said the tariffs could disrupt regional supply chains and stall foreign investment, at a time when Mexico has been betting on "nearshoring," the trend of relocating manufacturing capacity away from Asia and closer to the United States.

"It's extremely concerning... I think our city, as well as the country, should look towards more market diversification," he said.