(Bloomberg) -- Mexico’s President Andres Manuel Lopez Obrador has done everything by the book to avoid confronting Donald Trump. The U.S. president’s new threat of tariffs throws that policy into question.

In his first response to the challenge, Lopez Obrador maintained the strategy he has followed with Trump in his first six months in power: He spoke about the need to avoid confrontation, deepen dialogue and find a long-term solution to the problem of migration with the U.S. He even addressed himself to Trump as "your friend" in the two-page letter he posted on the Mexican president Twitter account.

The problem is that approach faces clear limitations with an increasingly belligerent neighbor to the north. Mexico sends near 80% of its exports to the U.S. and even a 5% tariff on all its goods as Trump is proposing would have devastating consequences on its economy.

"It would be naive to think that Trump will not continue threatening bilateral trade and bilateral relations, as he gets closer to his re-election campaign," said Alejandro Schtulmann, who heads Mexico City-based consultancy Empra. Mexico will "drastically need to increase funding for immigration authorities and detention centers."

The peso, which Lopez Obrador often cites as a sign of his good performance, plunged on the news.

In recent weeks, Mexico focused on boosting detentions of Central American migrants passing through the country as a way to placate the White House. AMLO, as the Mexican president is known, repeatedly said he won’t get into a fight with Trump over his threats to shut the border because he wants to maintain good relations with the U.S. government, at some point even suggesting it should all be “peace and love" between both countries.

Hours before Trump’s tariff ultimatum, the Mexican president pushed for ratification of the reworked trade deal with the U.S. and Canada, known as USMCA, that Trump’s been trying to get the U.S. Congress to pass.

The stunning and rapid turnaround by Trump left AMLO’s government shocked.

"There’s an appropriate time to be showered by frozen water, and an appropriate time to enjoy a picnic. But combining both is ugly," Jesus Seade, Mexico’s undersecretary of foreign relations for North America, told reporters in Mexico City at an event scheduled before the news broke. "We are at a good moment of constructing a good relationship and we’re doused with cold water."

The big question now is how long Mexico can continue with a policy of no confrontation.

Asked about the tariffs, Seade said: "I’m not saying we’ll sit on our hands and do nothing until June 10 to see if it’s real or not, but I trust that it’s not something that will be put into action because it would be very serious. If it happens, in my opinion we need to respond in a strong way."

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