For Foreign Manufacturers in Mexico, a Weakening Peso Has Advantages, but not Without Costs

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Ever since Mexico’s Peso crisis of 1994, the value of the Peso against the US Dollar has been sliding. The decline has been gradual, benefitting foreign manufacturers who are buying in Dollars or Euros.

Now, the Trump administration is contemplating a substantial tariff on goods from Mexico. Economists think this policy ultimately may not have the desired effect however, as free market forces in Mexico will adjust over the long-run and prices for exports will re-stabilize, mitigating any effects of a tariff. Mexico’s advantages as a manufacturing location won’t just disappear overnight.

 

If you haven’t yet established Mexico manufacturing operations, download our latest white paper to learn about the benefits of the Peso, along with the other strengths of Mexico manufacturing.