Mexico would retaliate against President Donald Trump's planned steel and aluminium tariffs by imposing tariffs of its own on the most 'politically sensitive' US goods, Economy Minister Ildefonso Guajardo said on Tuesday.
Mexico's Economy Minister Ildefonso Guajardo said Mexico was prepared to fight back and hit the US president where it hurts after Donald Trump shot down Mexican and Canadian proposals that the neighbouring nations be granted an exemption from the steep US tariffs.
"We would have to target our response at the things they export that are most politically sensitive and hit exactly those goods. We have the ability to respond," he told Mexican broadcaster Televisa.
He said the Mexican government was currently analysing which US exports it would tax.
"We won't be making that public until we see exactly what (the Americans) are going to do," he said.
A top Mexican strategist said such tariffs could target exports from states that voted for Mr Trump in 2016, and which he would need to win to secure re-election in 2020.
"The key is to get down to details on what's going to affect Michigan, what's going to affect Wisconsin, what is Ohio going to do, how will Iowa or Nebraska react," Moises Kalach, the head of the strategic council for international business at Mexico's Business Coordinating Council, said.
"We can say to a given governor, this company exports 90 per cent of its production to Mexico, and it's going to be affected," he told Televisa.
The escalating row comes as the United States, Mexico and Canada renegotiate the North American Free Trade Agreement (NAFTA) that has linked their economies since 1994, and which Mr Trump has called the worst deal his country has ever signed.
On Monday, Mr Trump moved to hold the trade talks hostage to the tariffs, tweeting: "Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed."
Hours later, his top negotiator, US Trade Representative Robert Lighthizer, warned as the latest round of NAFTA talks wrapped up in Mexico City that they had been disappointing, yielding deals on just three new chapters out of about 30.
Canada, the top source of steel to the US market, has already vowed to take "appropriate, responsive measures" if the Trump administration goes ahead with the tariffs.
Germany, Britain, France and other US allies have also sounded the alarm over the impact the tariffs would have on their trade relationships with the United States.