U.S. President Donald Trump’s announcement of a five percent tariff on all goods imported from Mexico drew a swift response from the Mexican government. CGTN’s Alasdair Baverstock reports.

Just hours after Donald Trump announced the new five percent trade tariffs on all Mexican goods entering the U.S., due he said to Mexico’s failure to control illegal immigration at the U.S. border, Mexico responded with a letter to the U.S. president.

“I’m not a coward,” President Andres Manuel Lopez Obrador, wrote to his American counterpart, adding that “social issues are not resolved with taxes or coercive measures” and suggesting cooperation instead.

Mexico’s President had more to say at his daily morning press conference.

“I believe that President Trump will understand that this is not the way to solve things. I think that there will be a correction, if not right away, at some point”, he told the assembled media.

“These measures are neither in the interest of Mexicans nor United States citizens,” he said.

Five percent tariffs on Mexican exports to the US are bad news for Mexico, given that around three-quarters of all Mexican exports go to the U.S.

Last year, northbound exports totaled about 350 billion dollars’ worth of goods. Second place Canada trails far behind, buying just 14 billion dollars’ worth of Mexican products.

“Obviously the Mexican Peso went bonkers, it jumped three percent, and is currently trading at more than 2%,” said Juan Carlos Minero, a stock market trader in Mexico City.

The market analyst saw a large effect on the global economy.

“By hitting Mexico, Trump is hitting Nippon automakers”, he told CGTN. “So Asian automakers like Kia has fallen more than 5%, Hyundai fallen more than 2%, you have Honda and Nissan which have a lot of operations here in Mexico.

“Nissan which have a lot of operations here in Mexico falling more than 5%. So this is a real big problem for Mexico and a real big problem for the world economy.”

The tariff announcement comes as legislatures in Canada, the US and Mexico debate ratification of the USMCA – the update to the North American Free Trade Agreement.

“Mexico’s bilateral relations with the US are about more than just commerce,” Oscar Leon, the head of postgraduate economic studies at Mexico’s National Autonomous University, said.

“Although business interests here believe commerce and immigration are separate issues, for the Americans, and Trump in particular, they go together.

“So now we are paying the consequences of not having negotiated a broader deal, and Trump can pressure Mexico commercially where it hurts us more than them.”

With Trump’s further threat to increase the tariffs every month, Mexico’s problems will only grow… along with the pressure on the government to meet U.S. demands to halt the flow of migrants.