Mexican President Claudia Sheinbaum announced her intention to send a letter to U.S. President-elect Donald Trump on Tuesday, advocating for dialogue and collaboration in light of his proposed blanket tariffs of 25% on imports from Mexico and Canada.

Sheinbaum expressed concern during a press conference, stating, “One tariff will lead to another, jeopardizing our shared businesses.” She warned that such tariffs could trigger inflation and job losses in both nations.

In addition to the letter, Sheinbaum plans to request a phone conversation with Trump and will also reach out to Canadian Prime Minister Justin Trudeau. Trump, who is set to take office on January 20, indicated on Monday that he would implement a 25% tariff on imports from Canada and Mexico until they took stronger measures against drug trafficking, particularly fentanyl, and illegal immigration.

As of September, Mexico stands as the United States’ largest trading partner, accounting for 15.8% of total trade, with Canada following at 13.9%. The U.S. is also Mexico’s primary trading partner.

Sheinbaum questioned the rationale behind escalating tariffs between the two countries, emphasizing the detrimental impact on U.S. automakers with operations in Mexico, including General Motors and Ford.

The automotive sector is crucial to Mexico’s economy, representing over 35% of the country’s manufactured exports by value. The U.S. is the main destination for vehicles produced in Mexico, with approximately 79% of these vehicles exported northward.

Mexico contributes nearly 25% to the total vehicle production in North America.

The proposed tariffs could potentially breach the United States-Mexico-Canada Agreement, a trade pact established in 2020 during Trump’s first term.

In early trading on Tuesday, the Mexican peso depreciated by about 1.3%. Analysts at Banco BASE noted that the peso was among the currencies most adversely affected globally due to heightened risk aversion.

They added, “The possibility of a more radical second term is increasing, posing a risk to Mexico’s export sector.”

Sheinbaum emphasized that her administration has demonstrated Mexico’s commitment to addressing the fentanyl crisis affecting the United States, highlighting a decrease in migrant apprehensions at the border and the absence of new migrant caravans arriving at the U.S.-Mexico border.

Nevertheless, she pointed out that criminal organizations in Mexico continue to receive firearms from the United States. She stressed that the shared challenges in the region necessitate collaboration, open dialogue, and mutual understanding. “We do not manufacture weapons, nor do we consume synthetic drugs. Unfortunately, we are left with individuals who are victims of violence driven by the demand in your country,” she stated.

Giulia Bellicoso, an economist at Capital Economics, remarked that “downside risks are particularly pronounced for Mexico, given the country’s heightened vulnerability to the policies proposed by Trump.”

While regional markets have shown a degree of resilience, likely due to investors’ already pessimistic outlook on the possibility of a second Trump administration, Bellicoso indicated that the forthcoming challenges are expected to adversely affect Latin American assets and currencies.