How countries are preparing for Trump 2.0

After initially threatening retaliatory tariffs, Mexican President Claudia Sheinbaum later clarified that “there will not be a potential tariff war” between the US and Mexico after a phone call with Trump — although she denied the incoming US leader’s claim that the pair agreed to “effectively [close] our Southern border.”

Of particular concern is trade in oil and gas, which accounted for around $70 billion in trade between the two countries in 2023, according to Forbes. Mexico relies heavily on US oil and gas imports because the creaking infrastructure of its state-run oil company leaves it unable to produce enough to meet domestic demand. Texas firms — which supply Mexico with 90% of its natural gas — would be particularly hit if Sheinbaum ordered retaliatory tariffs on US oil.

Well-versed in the Trump playbook, Beijing has been preparing for potential tariffs for some time and is moving to impose its own restrictions to get Washington to the negotiating table, Reuters reported. However, a threatened 60% tariff on all Chinese goods would still represent an “armageddon announcement” for the country, one China researcher said. Still, any tariff would likely hurt China’s already weakening economy, experts said, particularly if Trump takes aim at China’s supply chain — like advanced US-made microchips China still relies on for its tech industry.

Chinese leaders are hoping to meet with Trump ahead of his inauguration and offer incentives to perhaps mitigate some of the duties, such as buying more US oil and gas — one of the few commodities not yet targeted by Washington’s export controls. But Beijing also has measures at its disposal to punish US industries and firms that are heavily reliant on China, such as the antitrust probe it launched into chip giant Nvidia earlier this month.

In Vietnam, “no one knows” what the outcome of Trump’s tariffs will be, The New York Times reported.

During his first term, Vietnam benefited significantly from Trump’s tariffs on China as foreign firms scrambled to diversify their supply chains. But outsourcing to Vietnam also had the effect of increasing the country’s trade surplus with the US: It now ranks #3 behind China and Mexico. That has many in Hanoi worried, given that Trump said his tariffs would target countries with which Washington has a significant trade deficit .

The European Union is looking to diversify its trading partners to make it less reliant on the US: member states are currently debating whether to finalize a free trade agreement with South America’s Mercosur bloc, for example. And, like China, the EU is also hoping to increase US liquid natural gas imports in an effort to reduce its trade surplus with the US.

But the overall picture for the EU is “not pretty,” Foreign Affairs wrote. No one knows exactly the types of tariffs Trump will impose, and the uncertainty risks further fragmenting the bloc given that each member state has different export and manufacturing strengths. European businesses also stand to be hit if Chinese firms slash prices further and increase exports to the bloc in response to Trump’s tariffs on Chinese goods.