Mexico’s reaction to U.S. President-elect Donald Trump’s threat of tariffs has been calm, firm, and based on facts. Now, the response needs to be followed by explicit actions or risk a North America trade conflict.

In responding to Trump’s warnings about imposing 25% tariffs on all Mexican and Canadian goods if those countries don’t do more to stem illegal migration and the trafficking of drugs into the U.S., Mexico President Claudia Sheinbaum made a rational economic argument: Such tariffs will hurt U.S. companies operating in Mexico, particularly automakers, and spur inflation and unemployment on both sides of the border.

“Threats and tariffs are not the way to address migration dynamics or drug consumption in the United States. Cooperation and mutual understanding are needed,” Sheinbaum said in a letter addressed to Trump this week.

Sheinbaum is right that the strength of North America’s economy relies on keeping what’s known as the United States-Mexico-Canada, or USMCA, trade deal alive. She is also right that tariffs and retaliatory tariffs would hurt mutual prosperity. And she’s right again that Mexicans are dying by the thousands from guns flooding into the country by way of its northern neighbor because of the U.S.’s insatiable demand for illicit drugs. Sheinbaum’s problem is that all her arguments stop being convincing when viewed through a Trumpian “America First” lens.

That’s because the 47th U.S. president isn’t looking to debate conceptual economic and public policies. If economic rationality wasn’t enough to prevent Trump from being reelected, what makes Sheinbaum think it would be capable of dodging tariffs? Whatever Mexicans feel about Trump’s style and prejudices, the bottom line is that some of his requests will need to be addressed if Sheinbaum doesn’t want her economy, which has supplanted China as the U.S.’s biggest trading partner, to derail amid the weight of trade disputes, border disruptions and mass deportations. The Mexican peso’s depreciation the past few weeks could be just a taste of things to come.

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Mexico shouldn’t necessarily consider this as punishment. When it comes to migration and drug trafficking, the government desperately needs to work with Trump on an effective response because of its own domestic urgencies. As the U.S.’s former ambassador to the country, Christopher Landau, argued recently, uncontrolled migration is no longer just a U.S.-Mexico issue but a global phenomenon where Mexico became the “last link” used by millions of people from around the world to pass through to its northern neighbor.

Nevermind Trump — this is a huge geopolitical, economic and humanitarian challenge for Mexico. That’s especially true given the country’s narco mess. The more cartels are allowed to expand and operate, contaminating societies with their violence and impunity, the more unavoidable it would be for Mexico to attract international support to address the problem. It’s a matter of national security, not just an annoying request from the gringos.

Initial signs of cooperation emerged Wednesday during a phone call Trump held with Sheinbaum, a conversation the President-elect called “wonderful” even if disagreements regarding migration policy remain. More needs to be seen in concrete terms once Trump arrives at the White House.

Sheinbaum’s response was also designed for an uneasy domestic audience as she navigates a delicate balance within her own Morena party. Unlike her predecessor Andrés Manuel López Obrador, who was the one and only voice setting the tone for the government, Trump’s return has rattled Mexico’s powerful ruling party, which controls most of the country’s political establishment. Here is where Trump’s tariff salvo was met with contempt, with some lawmakers wrongly arguing that Mexico should favor China over the U.S. Sheinbaum can’t afford to let these radical elements in her coalition roam free.

The Mexican government also has the tendency to think that just by saying something, it becomes automatically true — such as its insistence that the deep constitutional changes happening in the country won’t impact the USMCA or dismissing the fentanyl threat by saying its origins lie in Asia. The relationship between the U.S. and Mexico, as strategic as it may be for both nations, has steadily deteriorated in recent years and the “mutual understanding” pleas work both ways: Mexico would do well in hearing out the growing list of grievances that Washington has been, fairly or not, accumulating.

He didn’t mention them, but Trump’s tariff salvo is a reminder of two other thorny issues that threaten relationships in the region, and they are the U.S.’s growing trade deficit with its regional partners and the increasing influence of China in local supply chains. Since the old NAFTA was refashioned into the USMCA in 2018, Mexico’s annual trade surplus with the U.S. has doubled to about $165 billion. By design or not, the reduction in the U.S. deficit with China was mostly made up by an increasing gap with Mexico and Canada. It’s just a matter of time before Trump takes notice. It’s up to Mexico to get ahead of the curve, and follow through with a vow to replace some Chinese imports with North American-made products.

Just as we saw during his first term in office, Trump is pushing to get the best possible deal and will likely back off once he gets the political win he’s seeking. Destabilizing North America or even causing the USMCA to blow up would be a geopolitical gift to China that Washington would regret. Yet Mexico shouldn’t take any of this for granted. It needs to understand that Trump won’t be convinced with lessons in economic orthodoxy but rather with unambiguous moves that address his concerns.

JP Spinetto is a Bloomberg Opinion columnist covering Latin American business, economic affairs and politics. He was previously Bloomberg News’ managing editor for economics and government in the region.

Now that Donald Trump will be headed to the White House, it is all but certain that he will pursue significant new taxes on imported goods. Although a widely criticized policy, there is little stopping him from doing this due to trade powers that Congress has given the executive branch over the years. Before President Joe Biden leaves office, his administration and the current Congress should consider scaling back the president’s power to unilaterally enact tariffs. This restraint would protect households from large tax increases, prevent economic harm and ease relations with our major trading partners.

President-elect Trump has promised to enact significant new tariffs on imports. Last week he stated that on his first day in office he would impose 25% tariffs on all imported goods from Mexico and Canada, as well as import taxes on Chinese goods as high as 60%. Others are likely to follow. Trump could also pursue more targeted tariffs on certain goods in the same way he did during his first administration.

Contrary to what Trump and many of his supporters claim, these taxes would end up placing a significant burden on American households. Just a 10% across-the-board tariff plus a 60% tariff on Chinese imports could raise more than $2.8 trillion over a decade for an average tax increase of $1,820 per household, according to estimates from the Tax Policy Center.

Although these tariffs would have significant implications for the federal budget and household finances, there is little to stop Trump from unilaterally enacting these taxes under current law. Generally, the Constitution states that Congress has the authority to “lay and collect” taxes and regulate commerce with foreign nations. However, Congress outsourced much of the power to enact tariffs to the executive branch throughout the 20th century. As a result, the president now has broad authority to levy taxes on imported goods. In many cases, the administration only needs to determine there is a national emergency or a national security threat.

These unilateral tariff powers were used to great effect in the past by Trump and other presidents. During Trump’s first term he enacted tariffs on steel from most countries by claiming this served national security. Biden utilized powers from the Trade Act of 1974 to increase tariffs on Chinese imports. Decades earlier, President Nixon used existing authority to impose a 10% tariff on all imported goods coming into the United States.

The current Congress and Biden should step in and enact legislation that ensures that Trump is unable to impose such significant trade measures without congressional approval. They could do this much the same way Congress stepped in to block tariffs proposed by President Carter in 1980.

Scaling back these powers would have benefits besides protecting Americans from tax increases.

First, shifting the power to lay and collect tariffs back to Congress would mean that major tariff proposals are properly debated. Congress is currently required to debate and pass legislation to make even small changes to income or payroll taxes. This should be true for tariffs as well, especially proposals that involve trillions in additional federal revenue. Trump should have to convince Congress that enacting across-the-board tariffs would be consistent with his geopolitical goals and would be worth the economic costs.

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Second, handing the reins back to Congress would reduce market uncertainty. Simply the risk of tariffs can have a negative effect on the economy. Businesses that expect tariffs may be less likely to pursue investments that may be subject to taxation at some point in the future. Shifting tariff power back to Congress means that proposals to raise and repeal tariffs would be more predictable.

Third, it would help improve relations between the U.S. and its trading partners. Trump’s approach to trade policy has proved to worsen relationships between the United States and its most important trade partners. Even prior to Trump’s election, the European Union had already announced that it would hit back at the United States if Trump enacted tariffs on EU products. Trade wars with our allies run counter to Trump’s goal of countering geopolitical foes such as China and magnify the economic damage of Trump’s tariff policies.

Although legislation limiting the president’s tariff power could prevent Trump from unilaterally enacting tariffs, it may not prevent them entirely. Reports suggest that the Trump administration and Rep. Jason Smith, R-Mo., the chairman of the House Ways and Means Committee, are discussing ways in which to incorporate tariffs into next year’s tax bill. This would be a mistake, but at the very least it would be debated before being enacted.

While there are few tax issues that the Democratic Senate, Republican House and Biden agree on, they should be able to unite behind preventing significant, unlegislated tax increases on American households.

Kyle Pomerleau is a senior fellow at the American Enterprise Institute, where he studies federal tax policy. He wrote this column for the Los Angeles Times.