Peso value drops due to tariff threat, Valley businesses may soon be impacted

MCALLEN, Texas (ValleyCentral) — The Mexican peso dropped in value Tuesday after President-Elect Donald Trump announced his tariff plan.

Right now, $1 can be exchanged for 20 Mexican Pesos compared to 16.5 pesos in early June and about 18 pesos just last week.

The drop in value means Mexican shoppers will have less spending power for goods in the U.S.

South Texas College Economics Professor Kevin Peek says the value of the Mexican peso has been dropping gradually.

“It could detonate a recession from which it would be difficult to recover," Peek said.

The sharp drop since Mr. Trump's announcement could affect Rio Grande Valley businesses and even the U.S. currency if Mexico retaliates.

“If Mexico were to impose the same tariffs, you would see a depreciation of the dollar, which reduces the purchasing power of Americans when they travel into Mexico," Peek said. "If Mexico were to impose the same types of tariffs, you would see economic turbulence, particularly in our part of the area.”

Some Mexican shoppers are already feeling the pain as the peso drops.

Felipe Quezada, a shopper from Reynosa, is one of those impacted.

"Many people who come from Mexico to the United States, we do have to spend more and stretch it," Quezada said. “Not much can’t be done because the wages are low."

Peek says that the American economy as a whole would suffer if Mexico or Canada chose to impose their own tariffs and believes the Rio Grande Valley could be caught in the middle with economic troubles.

“If we were to continue to move forward with the tariffs, it's highly likely that depreciation would only continue leading to an ongoing reduction in demand for goods and services in our area, and we know what that means, unemployment, lower wages and just more difficulty in making ends meet," Peek said.

Peek adds that these issues are not just affecting our border, the Canadian Dollar is also dropping in value.