Knowledge Tree
Relations (1)
cross_type 3.00 — strongly supporting 7 facts
The Federal Reserve Bank of Richmond analyzes the economic impact of trade policies on Mexico, specifically modeling how tariff increases under various scenarios affect Mexico's Average Effective Tariff Rate (AETR) as described in [1], [2], and [3], and evaluating the role of the USMCA in trade relations as noted in [4], [5], [6], and [7].
Facts (7)
Sources
Tariffs: Estimating the Economic Impact of the 2025 Measures and ... richmondfed.org 7 facts
measurementUnder the Richmond Fed's 'Scenario 2' tariff model, Canada's Average Effective Tariff Rate (AETR) increases to 11.9 percent, while Mexico's AETR rises to 15.5 percent.
measurementThe Richmond Fed's 'Scenario 2' economic model adds 25 percent tariffs on goods imported from Canada and Mexico that are not covered under the USMCA, resulting in an overall Average Effective Tariff Rate (AETR) increase from 7.1 percent to 10.4 percent.
measurementThe most aggressive tariff package simulated by the Richmond Fed includes a 25 percent tariff on EU imports, 20 percent on Chinese imports, 25 percent on steel and aluminum, 25 percent on non-USMCA goods from Canada and Mexico, and 25 percent on auto imports.
measurementUnder the Richmond Fed's 'Scenario 3' tariff model, Mexico's Average Effective Tariff Rate (AETR) rises to 20.1 percent, Canada's AETR rises to 14.1 percent, and the European Union's AETR increases from 2.5 percent to 4.4 percent.
claimThe Richmond Fed observes that while approximately half of imports from Canada and Mexico fall outside the scope of the USMCA, these goods do not constitute the most import-heavy segments of U.S. trade with those countries, leading to a more dispersed impact across sectors compared to the high-volume sector targeting in Scenario 1.
measurementUnder the Richmond Fed's 'Scenario 3' model, the transportation equipment sector faces average tariff rates above 25 percent, reflecting the heavy dependence of U.S. auto manufacturing on imported parts and finished vehicles from Canada, Mexico, and the EU.
measurementThe Richmond Fed's 'Scenario 2' tariff model assumes a 20 percent increase on all imports from China, a 25 percent increase on all aluminum and steel imports, and a 25 percent tariff on non-USMCA goods from Canada and Mexico relative to the benchmark case.