President Claudia Sheinbaum warned Tuesday that Mexico might respond with its own tariffs after U.S. President-elect Donald Trump threatened to impose 25% duties on Mexican imports if the country doesn’t stop drug trafficking and migration across the border.

Sheinbaum expressed willingness to discuss the issues but emphasized that drug abuse is primarily a U.S. problem. “One tariff would lead to another, risking shared businesses,” she said, referencing U.S. automakers with operations in both countries.

She noted Mexico’s efforts to curb migration, highlighting that “migrant caravans no longer reach the border,” but acknowledged weakened efforts against drugs like fentanyl, manufactured by Mexican cartels with chemicals from China. Sheinbaum also criticized the flow of U.S. weapons into Mexico, calling drug addiction “a public health issue in American society.”

She suggested that U.S. spending on weapons should instead fund regional initiatives addressing migration’s root causes. “If the U.S. spent a fraction of its war budget on peace and development, it would help solve migration issues,” she said.

Sheinbaum’s firm stance contrasts with her predecessor, Andrés Manuel López Obrador, who struck deals with Trump to manage migration. A seasoned leftist, Sheinbaum declared, “We negotiate as equals, without subordination. We are a great nation,” though she remained optimistic about reaching an agreement.

Economic experts, however, fear escalating tensions. Gabriela Siller of Banco Base cautioned that Mexico’s tariff response could provoke Trump into following through on his threats, despite the U.S.-Mexico-Canada trade agreement prohibiting such unilateral tariffs. Disruptions could harm industries like automotive manufacturing, which rely on cross-border supply chains.

Sheinbaum labeled the threats “unacceptable,” citing inflation and job losses in both countries, and stressed dialogue as the solution. “If tariffs rise, who gets hurt? General Motors,” she said.

Trump, meanwhile, doubled down on social media, threatening tariffs of 25% on Mexican and Canadian goods, alongside additional duties on Chinese imports, unless migration and fentanyl trafficking stop. He claimed the measures would remain until “this invasion of our country” ends, urging Mexico and Canada to act or face “a very big price.”