The Day at a Glance | April 3 2025

The Top

• Yesterday, President Donald Trump announced reciprocal tariffs.

• In Mexico, gross fixed investment and private consumption declined in January.

• The European Commission announced that it would respond with proportional countermeasures to the new U.S. tariffs, stating that it´s ready to defend its economic interests and businesses.

• China called on the U.S. to remove the new tariffs and warned that it would take countermeasures if the escalation continues. It argued that the U.S. measures violate World Trade Organization rules.

• For the week ending March 29^th, 2025, initial jobless claims in the U.S. stood at 219,000 (225,000 expected), slightly decreasing from the previous week’s 225,000.

• Producer inflation in the Eurozone rose 3.0% y/y in February 2025, reaching its highest level since March 2023, driven mainly by a sharp rebound in energy costs (7.4% vs. 3.4% prev.).

• Oil prices fell 6% on Thursday after OPEC+ decided to accelerate the dismantling of production cuts starting in May, adding to the heavy losses triggered by President Donald Trump’s announcement of broad new tariffs on Wednesday.

Economic Environment

Yesterday, President Donald Trump announced reciprocal tariffs, imposing duties of at least 10%, which could reach as high as 48%, depending on the country. Specifically, China was hit with a 34% tariff, Europe with 20%, Japan with 24%, and Vietnam with 46%, among others. Notably, Mexico and Canada were excluded from these tariff measures and could even see lower tariffs going forward. The reciprocal tariffs also exempt certain goods, including steel and aluminum (already subject to a 25% tariff), copper, pharmaceuticals, semiconductors, wood products, items covered by Section 232 tariffs, gold and silver bullion, and some energy and mineral resources not available in the U.S. In this context, North America fares relatively better compared to the rest of the world. Later today, a 25% tariff on automobiles will be announced.

In Mexico, gross fixed investment and private consumption declined in January. Gross fixed investment fell -6.7% y/y in January 2025, based on original figures. Within the data, construction contracted -9.9% y/y, while machinery and equipment declined -3.2% y/y, also according to unadjusted figures. By sector, private investment dropped -4.4% y/y, while public investment plunged -24.8% y/y. On a seasonally adjusted monthly basis, investment fell -1.5% in January. Meanwhile, private consumption in Mexico posted an annual decline of -1.3% y/y, according to original figures. Spending on imported goods fell -7.9% y/y, while spending on domestic goods and services edged up 0.1% y/y. On a seasonally adjusted monthly basis, private consumption declined -0.3% in January. Overall, both private consumption and gross fixed investment logged declines at the start of 2025, and these trends may persist for several more months.

Markets and Companies

Main U.S. stock indices were trading sharply lower following the announcement of a new tariff policy by President Donald Trump. The plan includes a base tariff of 10% on all imports, along with significantly higher duties for countries such as China, Vietnam, the European Union, and Taiwan. The measure has heightened fears of a global trade war and a potential slowdown in U.S. economic growth.

In Europe, markets declined after statements from the European Commission, which warned that it is preparing trade retaliation if the U.S. does not change its stance. The reaction was also negative among key exporters like Germany and France, particularly in the automotive and industrial sectors.

Meanwhile, in Asia, markets closed lower. China called the measure unilateral and unjustified, promising strong countermeasures, while South Korea, India, and Australia also criticized the tariffs and expressed concerns about their impact on regional trade.

In commodities, oil prices fell after eight OPEC+ countries agreed to increase production by more than 400,000 barrels per day starting in May. Meanwhile, gold reached a new all-time high of $3,167 per ounce, benefiting from increased demand for safe-haven assets amidst rising economic and geopolitical uncertainty.

In fixed income, U.S. Treasury yields declined. The 10-year bond stood at 4.03%, while the 2-year bond fell to 3.73%.

Lastly, Mexico´s IPC was trading lower at 53,001 points, while the exchange rate stood at 19.87 pesos per dollar, compared to 20.39 in the previous session.

Corporate News

• Lululemon shares were declining after confirmation that nearly 90% of its production comes from Asian countries affected by the new U.S. tariffs, including Vietnam. The company’s high supply chain exposure to the region raises concerns about margins and costs.

• Nike shares were also down amidst increasing tariff pressure, as about 50% of its footwear is manufactured in China and Vietnam. Although the company recently exceeded quarterly estimates, the adverse trade environment complicates its short-term outlook.