A new Moody’s Ratings analysis warns that President Donald Trump’s proposed 25% tariffs on Mexican imports would significantly disrupt bilateral trade flows valued at US $740 billion. The financial services company’s Monday report highlights that strategic industries with integrated operations across both countries would bear the heaviest impact.

“The effect of tariffs and retaliation [from Mexico] would spill over into direct trade figures between the United States and Mexico, due to intermediate inputs for assembly and processing, which are transferred back and forth within the manufacturing, automotive and technology industries of both countries,” Moody’s stated.

The tariffs, which Trump proposed after winning the November presidential election, could be implemented as early as Saturday. Trump said the measures would remain until “Drugs, in particular, Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

The $740 billion disruption estimate accounts for both U.S. tariff implementation and potential Mexican retaliation. Given that Mexican exports to the U.S. represent approximately 30% of Mexico’s GDP, with 80% of Mexico’s exports going to the U.S., the economic impact could be severe. Moody’s predicts these measures could restrict Mexico’s economic growth to just 0.6% in 2025.

Beyond direct trade impacts, Moody’s warns of broader economic consequences for Mexico, including peso depreciation and increased inflation. The ratings agency noted that if Mexico responds with retaliatory tariffs, it “would complicate Mexico’s efforts to reduce the fiscal deficit and increase pressure on the sovereign credit profile.”

However, implementation timing remains uncertain. European affairs analyst Yannis Koutsomitis noted on X that despite Trump’s initial plan to impose tariffs by February 1, recent statements suggest the U.S. government will review the economic effects first. “The delay would allow time for negotiation between country officials,” wrote Koutsomitis, indicating the decision might be postponed until at least April 1.