Mexico jumps on the tariff bandwagon, Milei’s defeat

Mexico's decision this week to impose tariffs on countries it doesn't have a free trade agreement with (notably China) was probably influenced by trade talks with the US, but it also supports the government's objectives of protecting Mexican industry and raising revenues to plug the budget deficit. For Mexico's macro outlook, the more important developments were the other (larger) revenue-raising measures for 2026 unveiled in the budget. Elsewhere, the poor showing for President Milei's party in the Buenos Aires provincial election last Sunday doesn’t bode well for him in the mid-terms in October, but we doubt that it will trigger a U-turn on economic policymaking.