Now that President Donald Trump has taken office, relations with Mexico are becoming increasingly contentious.
President Trump is moving forward with his campaign promise of building a wall along the United States’s border with Mexico.
As a result of these plans, the president of Mexico, Mr. Enrique Peña Nieto, publicly canceled a meeting that had been scheduled with the U.S. president.
In turn, Trump has accused the Mexican government of wronging the U.S. government, including burdening the nation with an influx of illegal immigrants and criminals as well as creating a trade deficit.
The president floated a plan to raise funds for the wall through the imposition of a 20 percent tax on imports to the United States, but furor on all sides saw his press secretary take a step away from the proposition.
Trump has already set his plans to increase border security into motion by signing an executive order for the construction of the wall.
This increased security is quickly becoming a concern for the Mexican government as a growing number of migrants threatens to ignite immigration crises in towns throughout Mexico, leaving the nation with a large number of people that the country is simply not equipped to handle.
These concerns have arisen because, in recent months, a large number of migrants from Central America fled northwards to Mexico in order to escape violence and poverty in their own countries.
With U.S. borders closed off to these migrants, it is projected that migrant shelters will become overcrowded and the rate of unemployment will rise. As part of increased border security, Mr. Trump’s executive order also encompasses measures that will step up deportation within U.S. borders.
Mr. Peña Nieto has voiced his opposition to the measures Trump has proposed to curtail immigraton, declaring that these moves will only further divide the two neighbor nations.
Trump took to social media to call the Mexican president out. In his tweet, Mr. Trump that it was best that the upcoming meeting between the two heads of state was canceled because Mexico remains unwilling to pay for the construction of the wall.
On the heels of the back and forth exchanges between the two presidents, another meeting that had been arranged between the Mexican foreign minister and the U.S. Homeland Security secretary, John F. Kelley, was also canceled.
Consequently, both sides have aired their feelings of dissatisfaction and unfair treatment. The bad feelings have now escalated to Mexico threatening to take more drastic action.
Indeed, Mexico may possibly leave the North American Free Trade Agreement (NAFTA), a possibility which arose after Mr. Trump made his desire to renegotiate the agreement known.
Mexican officials and businesspeople are currently weighing the benefits and disadvantages of renegotiation.
It is apparent that a majority of these groups feel that a long and drawn-out negotiation process would be more harmful than helpful in the long-term. Rather than dealing with the economic uncertainty, Mexico may just pull out of NAFTA altogether.
However, the dissolution of this long-standing agreement could have huge economic repercussions for both countries. On a day-to-day basis, about $1.4 billion worth of goods are exchanged.
Mexico is hugely reliant on this trade because the United States is a major customer.
Of Mexico’s total exports, the United States buys about 80 percent of these goods. The relationship is reciprocal as Mexico is also a major buyer of American products. Mexico is the second largest market in the world for American goods. Thus far, it is unclear what changes the Trump administration is looking to make to the NAFTA agreement. However, Mexican officials are planning on caution. If the terms of the agreement prove to be too stringent, they are prepared to pull their nation out of the agreement altogether.
Still, Mexican officials are ready to utilize their leverage in the bargaining process. Mexico’s importance to the United States’ economy is a major bargaining chip that will likely come into play. Mexican officials have made it known that they plan to address other issues of importance in the upcoming meetings that cannot be ignored.
These issues include the United States’s dependence on Mexico to combat drug cartels and Mexico’s role in the prevention of allowing illegal migrants from Central American nations from crossing U.S. borders.
It is the stance of Mr. Peña Nieto’s administration that the construction of a wall on the U.S.-Mexico border is not as effective a measure for border control as Mexico’s cooperation in managing migration and security.
Essentially, the stance of the Mexican government at the present is that the Trump administration must choose between having a wall for border security or Mexico’s cooperation.
It seems that the Mexican government is planning to extend the negotiations to attain better terms by bringing trade issues into the fray. Mexican officials hope that by extending negotiations, they will receive support from U.S. companies that rely heavily on the NAFTA agreement for making profits.
Already, Trump’s election has hit Mexico economically. He has vocalized his intentions of bringing manufacturing that is normally exported to low-wage countries like Mexico back into more economically depressed areas in the U.S.
Mr. Trump’s intentions are already starting to make waves. Plans to construct a $1.6 billion factory in Mexico were canceled by Ford Motor Co. Similarly, General Motors Co. has announced that it intends to returning manufacturing jobs back to Americans.
In response, Mr. Peña Nieto is trying to preserve the strong economic ties between the United States and Mexico, publicizing pleas to preserve free trade between Mexico, the United States and Canada. Moving forward, the Mexican president wants to maintain trade between the three North American nations free from tariffs and quotas.
Mexico has a history of steadfast adherence to a policy of free trade.
Though this is the ideal end, some economic experts believe that abandoning NAFTA may be more beneficial than drawn-out negotiations.
This is the verdict from a Mexican brain trust, which is based out of the Autonomous Technological Institute of Mexico (ITAM).
Without the NAFTA agreement, the alternative is oversight from the World Trade Organization. Mexican experts from the brain trust are not opposed to the possibility.
In this scenario, it is projected that the tariffs imposed for imports of Mexican goods would only be about three percent. This is such a small increase that experts doubt that the tariff would be a deterrent for trade between the two countries.
Thus, experts are optimistic that the worst-case scenario for Mexico is not detrimental. Still, some believe that Mexico will not easily walk away from the negotiating table for NAFTA.
At the moment, negotiations are still scheduled to move forward at the end of January as Mr. Trump and Mr. Peña Nieto are set to meet.