The Risk of Mexico Being Shut Out of North America Is Rising
The Risk of Mexico Being Shut Out of North America Is Rising
"China under Xi Jinping has been keen to develop relations with Mexico," said AS/COA's Eric Farnsworth to the Financial Times.
Donald Trump threatens Mexico’s economy with tariffs on its exports. Mexico agrees to negotiate and a deal is reached. The result? Business as usual and both sides claim a win.
That scenario played out in the first Trump administration, when the US-Canada-Mexico free trade agreement — hailed by the then-president as “the best agreement we’ve ever made” — replaced Nafta.
Optimists believe the second Trump administration will stage a repeat performance. They shrugged off last week’s vow by the president-elect to impose 25 per cent tariffs on imports from Mexico on his first day back in office. Investors are buying the positive view. After wobbling on Trump’s tariff threat, three days later the peso had recouped its losses. [...]
Eric Farnsworth, vice-president of the Council of the Americas business lobby, said investors who dismissed Trump’s latest tariff threat as a negotiating ploy should remember his first-term pledge to pull the US out of the Trans-Pacific Partnership. “He did pull out and there was no negotiation,” he said. “The threat against Mexico this time has echoes of that.”
Sheinbaum may yet reach a deal with Trump. But the risks of the US’s southern neighbour losing tariff-free access to the rest of North America are clearly rising — and if they do, one country will be ready. “China under Xi Jinping has been keen to develop relations with Mexico,” said Farnsworth.
