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Mexico

An Already Unstable Mexico Fears a Future with Trump

Even before assuming his new position, Trump has damaged the Mexican economy by pushing automakers to pull their factories out of Mexico

Peña Nieto closes a meeting with SRE officials to speak about Donald Trump's presidency, photo: Cuartoscuro/Moisés Pablo
11 months ago

Donald Trump’s presidency could not have come at a worse time for Mexico.

Drug violence has risen again, the government has trouble fighting rampant corruption and there have been protests across the country over this month’s increase in gasoline prices. Mexico’s oil production has fallen and it continues to fail to produce the fuel it requires.

Even before assuming his new position, Trump has already damaged the Mexican economy by pushing automakers to pull their factories out of Mexico, threatening its most important manufacturing sector. Faced with an uncertain economic outlook, the peso has fallen to record lows against the dollar.

Now Trump moves into his presidency promising to control immigration, after a famous speech in which he dismissed migrants as delinquents and “rapists.” Remittances sent by these expatriates inject billions of dollars into the Mexican economy.

The president-elect has also threatened to impose tariffs on Mexican products and to force Mexico to renegotiate the North American Free Trade Agreement (NAFTA) and to pay for a wall along the border measuring 3,145 kilometers (2,000 miles) which divides the two countries.

“We have begun a year full of challenges and setbacks,” the Mexican Episcopal Social Pastoral Commission said in a statement Wednesday. “International economic crises are fatal to our economy. Paradoxically, although the choices and political decisions of our neighbors are important for our future, we do not even have the opportunity to comment.”

Trump’s victory has also worsened Mexicans’ opinion of their president, Enrique Peña Nieto, who held an unpopular meeting with the then Republican candidate.

Peña Nieto’s approval rating fell to 12 percent this month, according to a Grupo Reforma poll. That coincided with a rise in approval of the left-wing populist politician Andrés Manuel López Obrador, whose National Regeneration Movement (Morena) party overtook all others in the Reforma poll.

Two major manufacturers have already abandoned their expansion plans in Mexico, and Trump has threatened General Motors and BMW to place a border tax on the vehicles built there. For now, BMW has continued with its plans to open a new factory in Mexico, while GM announced that it would move 450 new jobs from Mexico to Michigan.

Rating agencies have cut Mexico’s debt rating, foreign direct investment is expected to suffer and the government has had to cut spending and increase fuel prices, inciting widespread protests and looting.

The impending crisis has divided Mexicans into three large groups. The first is a government and business elite that hope to win over Trump with a pragmatic strategy based on Trump’s corporate experience. The second group brings together agricultural groups who have never liked the huge imports of cheap U.S. grain under NAFTA and who hope to revoke parts of the 1994 agreement. Another segment of the population wants its leaders to face the Trump’s abusive attitude.

National Autonomous University of Mexico (UNAM) economist Eugenio Correa pointed out that, due to Trump’s campaign pledges in particular, Mexico must reduce its dependence on the United States, which is by far its largest trading partner, and develop national oil refineries, and agriculture and trade ties with other Latin American countries.

Some fear the possibility of a wave of migrants returning, whether by deportation or by fleeing a hostile environment in the United States. For now, there have been only anecdotal cases of these “self-deportations,” but an exodus of returns could decimate the almost $25,000 million in remittances that the country receives each year.

Mexico must prepare to counterattack, said former Foreign Relations Secretary Jorge Castañeda. It could cooperate less with deportation processes, for example, or stop its efforts in stopping Central American immigration to the United States. He and others also argue that Mexico could stop helping the United States in anti-drug operations.

Others, such as Víctor Suárez, who in 1995 launched a national movement of agricultural cooperatives, said that imports of grain from the U.S. removed six million Mexican farmers and workers from the field. He sees a positive side to renegotiating the agreement.

Suárez believes that the free trade agreement has hurt farmworkers, unions and the environment in Mexico, the United States and Canada, and would like to see protections for Mexican corn, beans, rice and sugar against U.S. exports.

“For us, the renegotiation of NAFTA has been a demand since 1994. We have argued that it was poorly negotiated and more poorly executed, to the detriment of Mexican agriculture,” he said.

The Mexican government has said it wants to negotiate with Trump “as soon as possible.”

Peña Nieto recently appointed Luis Videgaray, an acquaintance of Trump’s son-in-law, Jared Kushner, to lead the talks as Foreign Relations Secretary.

MARK STEVENSON

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