Mexico's President Claudia Sheinbaum looks on at the National Palace, in Mexico City, Mexico January 21, 2025. HENRY ROMERO / REUTERS

Mexican President Claudia Sheinbaum angrily rejected an accusation by the United States Saturday that her government has an alliance with drug cartels, and vowed to retaliate against Donald Trump's sweeping tariffs.

Tensions between the closely connected neighbors soared after the White House said Trump would slap 25% tariffs on Mexican as well as Canadian goods because of illegal immigration and drug smuggling.

Sheinbaum said she had told her economy minister, Marcelo Ebrard, "to implement Plan B that we have been working on, which includes tariff and non-tariff measures in defense of Mexico's interests."

Ebrard called Trump's tariffs a "flagrant violation" of the United States' free trade agreement with Mexico and Canada.

Sheinbaum also hit back after Washington accused her government of having an "intolerable alliance" with drug trafficking groups.

"We categorically reject the slander made by the White House against the Mexican government about alliances with criminal organizations," Sheinbaum wrote on social media.

"If there is such an alliance anywhere, it is in the U.S. gun shops that sell high-powered weapons to these criminal groups," she added.

"If the United States government and its agencies wanted to address the serious consumption of fentanyl in their country, they can combat the sale of narcotics on the streets of their main cities, which they don't do, and the money laundering generated by this illegal activity that has done so much harm to their population," Sheinbaum said.

Although U.S. politicians and analysts have previously alleged Mexican government collaboration with cartels, it is the first time that a formal accusation has been made, retired Mexican diplomat Agustin Gutierrez Canet said.

"It's really unprecedented that the U.S. government has now formally linked the Mexican government to drug trafficking in an official document," he told AFP.

"Trump uses this rhetoric to pressure but it should never be taken lightly," he added.

Analysts said the tariffs imposed by Mexico's biggest trade partner would deal a heavy blow to Latin America's second-largest economy.

The United States bought more than 80% of Mexico's exports last year, according to official figures.

"Since exports to the US account for around 20 percent of their GDP, today's tariffs could plunge both the Canadian and Mexican economies into recession later this year," the Capital Economics consultancy firm wrote in a note to clients.

Consumers may face a surge in prices for fruits, vegetables and nuts imported from Mexico, including avocados.

The U.S. imported more than $45 billion in agricultural products from Mexico in 2023, including fresh strawberries, raspberries, tomatoes and beef, according to the U.S. Department of Agriculture. The U.S. also imports Mexican beer, tequila and other drinks and spirits.

An across-the-board tariff of 25% could lead to a drop in Mexican exports of around 12%, according to Gabriela Siller, head of economic analysis for the financial group Banco BASE.

Mexico's gross domestic product "could fall by four percent in 2025, if the tariff remains in place all year," she warned.

"By the end of 2024, Mexico was on the verge of a recession. If this tariff lasts for several months, the Mexican economy will fall into a severe recession," Siller added.

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