<s>[INST] Donald Trump famously stated that “Mexico will pay for the wall.” After Mexico refused, Trump suggested that the U.S. could impose tariffs on Mexico. The economy of both countries is heavily reliant on trade with each other. The total volume of trade was over $670 billion in 2020, with the U.S. having a trade deficit of over $112 billion with Mexico.
In a new development, Biden has just announced that his administration will impose a 5% tariff on all goods imported from Mexico. What is likely to be the immediate impact of the new tariff on the U.S. economy and Mexico?[/INST]