MEXICO CITY (Reuters) - Financial analysts and business leaders on Tuesday reacted to a threat from U.S. President-elect Donald Trump to impose 25% tariffs on top trade partners Mexico and Canada when he takes office for a second term in January in a move that could trigger a trade war.

Mexico is the country's top trade partner as of September, representing 15.8% of total trade, followed by Canada at 13.9%. 

Trump also threatened "an additional 10% tariff, above any additional tariffs" on imports from China, the third-largest trade partner at 11.9%.

CAPITAL ECONOMICS

"We suspect investors may be under-appreciating the impact from Trump's policies on Mexico," said Giulia Bellicoso, a markets economist. "We suspect Trump's tariffs will take a toll on Mexican equities by denting optimism about nearshoring and limiting investment into the country."

"We expect Trump to start another trade war," she added.

MEXICAN EMPLOYERS' CONFEDERATION, COPARMEX

"I think that more than anything, it's a way for Trump to kick off negotiations that favor his country," said Mario Cepeda, who heads Coparmex's chapter in Juarez. "Remember, even though we're neighbors, we're not friends."

"At the end of the day he's looking out for his interests, and we should be doing the same."

CIBANCO

"We believe Trump's announcement is a tactic to negotiate with these three countries, his main trade partners, from a position of strength, taking into account that imposing tariffs would also be negative for the U.S. economy," CIBanco said in a note.

"As such the final result of the tariff threat could be less severe once negotiations with the respective parties conclude."

BORDER BUSINESS BLOC

"There are a lot of things up in the air, there's a lot of uncertainty," said Jesus Manuel Salyandia, who heads the Border Business Bloc out of Juarez, which borders El Paso, Texas. "Industrially speaking, the economy will slow."

Trump's rhetoric, from the tariff threats to his promised migration crackdown, "aren't helping us much in terms of investments that could otherwise arrive here," Salyandia added.

BANCO BASE

"The U.S.-Mexico-Canada Agreement (USMCA) will be reviewed in July 2026, which is expected to raise risk aversion especially in Mexico, as both U.S. and Canadian officials have mentioned that they would be better off with bilateral agreements," Banco BASE said.

It added that the tariff threat "raises the likelihood that Trump's second term will be more radical, which represents a risk for Mexico's export sector."

"Trump's threat implies that he could sacrifice the U.S. economy in the short term in order to curb the immigration and drug crises," the group's director of economic analysis, Gabriela Siller, added on X.

ALLIANCEBERNSTEIN

"As in previous instances of tariff threats, the exchange rate will play its role as a shock absorber reflecting the risks stemming from a persistent change in the commercial relationship," said Armando Armenta, a senior economist at the asset manager.

"However, trade linkages among USMCA members run deep, and a cooperation agreement on the control of illegal drug trafficking, labor migration, border protection and goods trade could quickly reverse the move."

MOODY'S ANALYTICS

"The Mexican economy will be one of the most exposed to negative effects from the economic policies of U.S. President Trump," said Moody's Analytics, predicting lower growth particularly in the next two years as investment, remittances and the finance sector could all be shaken by the volatility.

It said it was cutting its forecast for Mexico's gross domestic product (GDP) growth next year to 0.6% from a prior expectation of around 1%, and that it now predicts growth of around 1.6% in 2026 compared to a prior estimate of 2.5%.

BANORTE

Economists at Mexican bank Banorte warned about "caution among investors as increased trade and political tensions between the U.S. and other countries loom on the horizon."

VECTOR ANALISIS 

Trump's tariff threats against Mexico, Canada and China "could violate free-trade agreements and affect the three economies," Vector Analisis said in a post to social media.