The Potential Effects of Turiffs Between the United States and Mexico: A Bi-Regional Social Accounting Matrix Model

The potential impact of the tariffs that the United States plans to implement in 2025 is causing concern among policymakers. The first countries to be affected would be Canada and Mexico, particularly after the imposition of 25% tariffs on aluminum and steel that could take effect in March and, in the case of Mexico, on the automotive industry, which accounts for most of its trade surplus with the United States. This study employs a Social Accounting Matrix and a biregional Extended Multisectoral Model to analyze the effects of the tariffs on U.S. and Mexican industries. By simulating the tariff scenario between the two countries, the results show the spillover effects and the negative impact of a trade conflict on both economies.