The Day at a Glance | March 4 2025

The Top

• Trade wars erupt following US tariffs on Mexico, Canada, and China.

• President Trump announced that starting April 2^nd,additional tariffs will be imposed on agricultural imports into the US, urging American farmers to boost local production.

• On Tuesday, a Chinese central bank advisor stated that the institution should develop new policy tools to stimulate consumption while strengthening efforts to support real estate and capital markets.

• The Eurozone´s unemployment rate remained at 6.2% for the third consecutive month in January 2025, matching its record low after December’s downward revision and coming in below market expectations of 6.3%.

• On Tuesday, Ukraine stated that it will do everything possible to maintain ties with the US after President Donald Trump suspended military aid to Kyiv, marking his most significant shift toward closer relations with Russia.

• Oil prices extended losses on Tuesday following reports that OPEC+ will proceed with its planned production increase in April, coinciding with the US tariffs on Canada, Mexico, and China, along with Beijing’s retaliatory measures.

Economic Environment

Trade wars erupt following US tariffs on Mexico, Canada, and China. President Donald Trump’s new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, alongside a tariff hike on Chinese goods to 20%, triggering fresh trade conflicts with the U.S.’s three largest trading partners. These tariff measures, which could impact nearly $2.2 trillion in annual bilateral trade, came into force just hours after President Trump accused all three countries of not doing enough to curb the flow of fentanyl and its chemical precursors into the US. In response, China immediately retaliated after the deadline expired, announcing additional 10%-15% tariffs on certain US imports starting March 10^th, along with new export restrictions on designated U.S. entities. Meanwhile, Mexico and Canada, which have maintained a largely tariff-free trade relationship with the U.S. for three decades, are preparing immediate retaliatory measures against their long-standing ally.

Markets and Companies

Futures for major US stock indices are trading lower. The market has reacted negatively to the announcement of tariffs on exports from Mexico, Canada, and China to the U.S. China and Canada have announced retaliatory measures, while Mexico is evaluating possible actions. Meanwhile, on the international front, the suspension of U.S. aid to Ukraine is raising concerns about the evolution of the conflict. As a result, the European Union has indicated its intention to significantly increase defense spending. Stock markets in Asia and Europe were also trading lower.

Oil prices extended losses, reacting to reports that OPEC+ will increase production in April and to the imposition of U.S. tariffs on Canada, China, and Mexico. Meanwhile, gold is up due to increased demand for safe-haven assets.

U.S. Treasury yields are declining. The market is awaiting employment data set to be released at the end of the week. The 2-year yield stands at 3.9%, while the 10-year yield is at 4.15%.

In Mexico, IPC futures are trading higher.

The peso-dollar exchange rate stands at $20.9 after closing at $20.69 yesterday.

Industrias Peñoles will report its results today, which we expect to be driven by the strong performance of precious metals in the last quarter of 2024. Meanwhile, its subsidiary Fresnillo has already released its figures, highlighting a 29.3% increase in revenue for the year, while EBITDA rose 136% y/y.

Corporate News

• Target’s CEO stated that tariffs on Mexican imports will lead to higher prices for U.S. consumers in the coming days.

• Best Buy reported better-than-expected revenue and earnings for the quarter. However, its shares were down 2% in pre-market trading.

• TSMC announced an additional $100 billion investment in chip production in the U.S.