Ground Truth Briefing: What Does Mexico Expect of President-elect Donald Trump?

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The Takeaways

Last year, a number of issues related to Mexico became a focus of the U.S. presidential campaign, and many of President-elect Donald Trump’s policy promises continue to center on immigration and trade with Mexico. On January 10, 2016, Duncan Wood, Director of the Wilson Center’s Mexico Institute, moderated a discussion on the range of reactions that Mexicans have had to the election of Donald Trump and the hopes and expectations they have for future negotiations between the Mexican government and the incoming Trump administration. 

Juan Pardinas, Director of the Mexico Institute for Competitiveness, began the discussion by noting that though many in Mexico expected Trump’s rhetoric to shift after winning the presidential election, it is now clear Trump indeed intends to follow through on his campaign promises upon reaching the White House. As the President-elect continues to threaten to impose a 35 percent tariff on automobiles imported from Mexico, Ford has decided to scrap its plans to build a $1.6 billion plant in San Luis Potosí and Fiat-Chrysler has announced that it may follow Ford’s lead. Pardinas then highlighted the country’s concern with the Mexican government’s failure to respond to these recent events or to outline a clear, concrete strategy for approaching negotiations with the incoming Trump administration, which has sparked anxiety among both the market and the Mexican population.

Luis de la Calle, an expert in international trade who participated in the design, promotion, and implementation of NAFTA, joined the conversation to reiterate this point and to emphasize the importance of the Mexican government drawing clear boundaries during future negotiations. Highlighting the fact that Mexico is the United States’ 2nd largest market, de la Calle suggested that the Mexican government should not enter a renegotiation of NAFTA from a purely defensive position. Instead, he suggested, Mexico should prepare a series of proposals, including improving transportation and energy infrastructure, border efficiency, student exchange, medical tourism, among others.

Agreeing with de la Calle’s suggestions, Pardinas emphasized that Mexico cannot portray itself as a weak trading partner. In order to keep NAFTA intact, Mexico will have to demonstrate how the trade agreement is beneficial for the United States, how it has strengthened North America’s competitiveness in the global market, and how imposing trade barriers between Mexico and the United States would be counterproductive. If Mexican President Enrique Peña Nieto and Mexico’s new Foreign Minister Luis Videgaray are incapable of outlining these clear boundaries for negotiations, both Pardinas and de la Calle suggested that Mexico may have to redefine its relationship with the United States beyond diplomatic links through the involvement of private companies, think tanks, and other sectors of civil society.

When asked about how the election of Donald Trump has affected companies’ investment plans, de la Calle indicated that “every time Donald tweets, the peso reacts,” but that so far the market has not seen a large decline in investment programs into Mexico. In fact, he says, if Donald Trump continues his threats, it may attract investment into Mexico since by devaluing the Mexican peso, Trump has made Mexico more attractive. Also, companies are aware that it would be very difficult for Trump to impose a 35 percent duty on imports from Mexico and that this proposal will most likely be stopped by Congress. However, both experts concluded the conversation by noting that the future of global trade is incredibly uncertain. 

Speakers

  • Duncan Wood

    Director, Mexico Institute
  • Luis de la Calle

    Mexico Institute, Advisory Board Member and Managing Director, De La Calle, Madrazo & Mancera and former Undersecretary, Ministry of Economy, Mexico
    Managing Director, De La Calle, Madrazo & Mancera and former Undersecretary, Ministry of Economy, Mexico
  • Juan Pardinas Carpizo

    General Director of the Mexican Institute for Competitiveness (IMCO)