Donald Trump has made clear his intent to supercharge his “America First” strategy to international coverage in his second time period – and Mexico appears to be like set to be on the tip of the spear.
Whereas a lot of Trump’s predecessors have additionally adopted a “realist” technique – that’s, one the place relative energy is on the forefront of worldwide relations, whereas diplomatic success is seen via the way it advantages one’s personal nation – the incoming president has displayed an obvious unwillingness to contemplate the ache that his plans would inflict on focused international locations or the responses this may engender.
Trump’s proposed insurance policies threaten Mexico in three key methods: First, his purpose of deporting hundreds of thousands of migrants would put great stress on Mexico’s financial system and society because the nation tried to soak up the inflow. This could be exacerbated by his second menace, a pointy improve in tariffs, which may devastate the essential export sector of Mexico’s financial system. And third, Trump has floated the thought of utilizing U.S. army energy to confront narcotraffickers inside Mexico, which might straight impinge on Mexico’s sovereignty and will generate extra violence on each side of the border.
However as a scholar of Latin American politics and U.S.-Latin American relations, I see a number of choices that Mexico may use to push again on Trump by imposing excessive prices on U.S. pursuits.
Certainly, Mexican President Claudia Sheinbaum has already signaled how she could counter Trump’s insurance policies. The obvious instruments are ending cooperation on medicine and immigration and imposing tariffs of her personal. She may additionally revoke among the decades-old tax and labor privileges which have benefited U.S. companies working inside Mexico. And eventually, she may play the “China card” – that’s, within the face of worsening U.S.-Mexico ties, Mexico may flip to Washington’s greatest financial rival at a time when Beijing is in search of to claim extra affect throughout Latin America.
From conciliation to confrontration
In fact, a worsening relationship shouldn’t be inevitable.
Throughout Trump’s first time period, Mexico’s then-president, Andrés Manuel López Obrador, maintained a constructive relationship with the U.S. administration. Actually, Lopez Obrador was surprisingly cooperative given Trump’s at occasions hostile rhetoric towards Mexico. For instance, he helped facilitate the Trump administration’s “Remain in Mexico” program for these in search of asylum within the U.S. and in addition accepted Trump’s calls for to renegotiate NAFTA and provides it a title reflecting U.S. management: the United States-Mexico-Canada Settlement, or USMCA.
President Donald Trump walks to the Rose Backyard with Mexican President Andrés Manuel López Obrador in July 2020.
Win McNamee/Getty Pictures
Sheinbaum, who took workplace on Oct. 1, 2024, began with a cautious strategy to her relationship with Trump.
She congratulated Trump on his victory and urged dialogue with the incoming U.S. president. “There will be good relations with the United States. I’m convinced of that,” she informed reporters on Nov. 7, 2024.
However Trump hasn’t been conciliatory. Along with speak about dumping hundreds of thousands of immigrants throughout the border, he introduced on social media on Nov. 24 that he would impose a 25% tariff on Mexican and Canadian items – a transfer that will successfully abrogate the USMCA.
That submit seemingly ended Sheinbaum’s cautious strategy. In a strongly worded response, the Mexican president cautioned that she would reply in type. A commerce warfare, she famous, would hurt the economies of each international locations; progress on immigration and drug trafficking required cooperation, not threats, she added.
The influence of tariffs
Sheinbaum has mentioned she needs to keep away from a commerce warfare, however Trump’s threats have led her nonetheless to speak about how a commerce warfare would start. This commerce warfare, plus different prices Sheinbaum may impose on U.S. buyers, would additionally probably foment a coalition of opposition inside the U.S. enterprise group – a gaggle that has been a key ally of Trump.
Trump’s acknowledged purpose of placing excessive tariffs on items coming from Mexico is to encourage companies that at present exploit decrease employment prices in Mexico to relocate to the northern aspect of the border. However that strategy ignores the influence that retaliatory tariffs and funding controls would have on U.S.-based corporations that depend on the Mexican market. It could have a number of detrimental results.
First, a tit-for-tat tariff warfare would generate inflation for U.S. and Mexican shoppers.
Second, it could disrupt the combination of markets throughout North America. Because of the elimination of tariffs – a key element of each NAFTA and the Trump-era USMCA – markets and the manufacturing of products throughout North America have grow to be extremely interconnected. The commerce treaties severely decreased limitations to funding in Mexico, permitting important American funding in sectors equivalent to agriculture and power – the place U.S. corporations have been previously prohibited. Additional, producers now depend on processes wherein, for instance, the common automotive crosses the border a number of occasions throughout manufacturing.
Equally, agribusiness has developed symbiotic practices, such that grains, apples and pears are predominantly grown in the USA, whereas tomatoes, strawberries and avocados are grown in Mexico. Given these processes, the U.S. now exports over US$300 billion of products and companies per yr to Mexico, and the inventory of U.S. investments in Mexico reached $144 billion in 2023.
If Trump abrogates the commerce offers and imposes tariffs, he would possibly persuade buyers to spend their subsequent {dollars} within the U.S. But when Mexico imposes tariffs, enterprise taxes or funding restrictions, what would occur to buyers’ farms and factories already in Mexico?
Previous expertise means that any disruption to provide chains or U.S. export markets would awaken sturdy enterprise opposition, as analysts and enterprise teams have already acknowledged.
Trump shouldn’t be resistant to stress from U.S. companies. Throughout his first administration, corporations efficiently opposed Trump’s try to shut the border, arguing that slowing the circulate of immigrants additionally meant slowing vehicles full of products.
Safety and immigration
On the problem of the border and immigration, whereas Trump has issued threats, Sheinbaum has pressured the significance of cooperation.
Presently, the Mexican authorities expends important assets to patrol its personal southern border, to not point out coping with the numerous potential migrants who collect in its northern cities.
Mexico may demand extra help from the U.S. in trade for this work, plus the prices related to welcoming again the estimated 4 million Mexicans who’re at present within the U.S. with out correct documentation.
The deportation of undocumented immigrants that Trump has repeatedly promised would require different varieties of cooperation, equivalent to processing border crossings, and Mexico may slow-walk this course of. Mexico has already signaled that it’s going to withhold processing of non-Mexicans.
The 2 international locations have a historical past of collaboration in addressing the unlawful medicine commerce – however right here too there have additionally been tensions. Towards the tip of Trump’s first time period, for instance, a Mexican normal was arrested within the U.S. on drug prices. After a diplomatic uproar, he was returned to Mexico and launched.
In late November, Sheinbaum famous that she and Trump had mentioned safety cooperation “within the framework of our sovereignty.” However Trump’s marketing campaign rheotric appeared much less involved with Mexico’s sovereignty, floating the thought of sending troops to the border and even deploying them inside Mexico to counter narcotraffickers. That might clearly enrage Mexico, with penalties that will prolong far past a willingness to cooperate on the problems of drug trafficking.
An opportunity for China?
One nation that stands to learn ought to U.S.-Mexican relations deteriorate is China – a problem that Mexico may exploit.
China is now the primary or second buying and selling accomplice with practically each nation in Latin America, together with Mexico. The worth of U.S.-Mexico commerce is over $100 billion a yr, however the development of Chinese language imports into Mexico has been restricted considerably by rules-of-origin provisions in NAFTA and the USMCA.
A U.S.-Mexican commerce warfare may weaken or finish any incentive to maintain Chinese language items out. Additional, if the doorways to the USA are narrowed via tariffs and hostile rhetoric, China’s automotive components and monetary companies would clearly grow to be much more enticing to Mexican companies. A U.S.-Mexican commerce warfare, in brief, would increase Beijing’s entry to a market on the U.S. border.
A coalition of the involved?
In sum, if Trump goes via together with his threats, the consequence will likely be prices to shoppers and companies, plus a brand new alternative for China. That is more likely to foment a coalition of industries, buyers, shoppers and international coverage consultants involved with China – many components of which supported Trump’s marketing campaign.