Mexico would prefer to end its new tariff dispute with the U.S. through diplomatic means but is also considering retaliatory measures among other options, the country's economy minister warned June 3, according to The Wall Street Journal.

The Trump administration said May 30 that it will impose a 5% tariff on Mexican imports starting June 10 and will gradually raise the rate to as much as 25% by October if Mexico fails to take steps to end or significantly reduce illegal immigration through the U.S.-Mexico border.

If the U.S. follows through with its threat, Mexico could take the dispute to the World Trade Organization or hit back with tariffs on certain American goods, according to Mexican Economy Minister Graciela Márquez, who was in Washington on June 3 to start talks between the two countries.

Márquez said Mexico is "getting prepared" for its potential response to Washington's latest trade decision but does not favor resorting to tariffs to disrupt value chains, job creation and investment, the Journal reported.

S&P Global Market Intelligence data analysis shows that the auto sector would be among the biggest losers under the latest U.S. tariffs on Mexican goods. Business groups in the U.S. have also warned that potential retaliatory tariffs from Mexico could deal a blow to American workers and farmers.

The latest tariff dispute could also complicate the pending ratification of the new deal replacing the existing North American Free Trade Agreement, according to Jesús Seade, Mexico's deputy foreign minister and chief trade negotiator, the Journal reported.