TThe re-election of Donald Trump has led to a lot of news about Mexico. There are many reasons for concern. Trump has always had a hardball approach to Mexico. His extreme Cabinet picks and tough policy proposals – most recently his threat to raise tariffs by 25% until the border is secured – could hit Mexico like a ton of bricks.
It would be unwise to think that this is just bluster. But it’s equally wrong to think that all the bad news for one of Trump’s favorite foreign wallets. Doomsayers underestimate Mexico’s strength at the negotiating table as they underestimate the President-elect’s interest in making his country’s most important relationship work.
A closer look at the main US-Mexico issues—immigration, trade, and security—reveals a lot to fear, but also to strengthen the hearts of even observers.
Even a President with such a zero-sum view on geopolitics, listen carefully to Trump today and it becomes increasingly clear that he understands that there is no American greatness without a successful and stable Mexico.
Trump trades with Mexico
Of course, the US can move to limit Mexico’s exports by making all its goods and services available to it. But that can quickly lead to a loss of electoral power. That’s because Mexican manufacturing keeps the cheapest car in the US from being affordable or raspberries from being 50 dollars a pound in the winter.
Read more: Why Trump’s Money Could Raise Food Prices
Undoubtedly, the trade war will hurt Mexico a lot, considering that more than 80% of the country’s sales go to the US But although 16% US exports to Mexico look relatively modest, with the country still the second largest consumer of US goods.
Some US states are more dependent on the Mexican market than others. Texas, the country’s top exporter, has sold $144 billion worth of goods to Mexico by 2023—the highest amount of exports from any state to any country. But all states will quickly recognize Mexico’s role as a buyer of US goods in the event of Mexican retaliatory tariffs.
Despite the growing anti-Mexico rhetoric, there is significant trade cooperation that the tariff war will reduce.
Both the US and Canada are concerned that Mexico is acting as a pressure on wages and a “back door” to cheap Chinese imports. The Mexican government is also concerned and has been taking action. It has tripled the minimum wage in the past six years as part of cheap welfare reforms, and has taken on cheap Chinese imports—though not enough for some of its North American trading partners.
Just look at the steel industry. Mexico imposed tariffs on imported goods from China, and is looking north to strengthen its position. One of Mexico’s largest steel producers is also an important investor in the US, and has increased production in the country.
Mexico understands that no North American country can go it alone, and neither do the Republicans in Congress. The bipartisan Americas Act recognizes that in order for the US to stop China’s rise in the Western Hemisphere, keep prices stable, and strengthen its manufacturing, it needs to work with Mexico.
Trump understands this. His choice of trade chief protector, Robert Lighthizer, was negotiated to replace NAFTA, the US-Mexico-Canada Agreement (USMCA), from the beginning. And while Trump’s desire to “invoke a six-year USMCA renegotiation provision” sounds bad, it’s a process that was expected to happen already. Negotiations will be tough, but Trump says he wants to make the USMCA “a better deal;” far from the fear of 2016 that the US will completely exit the North American trading bloc.
That Mexican industry flourished—despite its internal turmoil—after the USMCA and the US-China trade war showed that, ironically, Trumpian economic nationalism actually works with Mexico in the equation.
A different war on drugs
Of course, the US could declare war on Mexican drug cartels independently. On paper, Trump still has it.
What is not noted is that his tone toward Mexico is sometimes more conciliatory today. While campaigning, he highlighted the suffering organized crime has caused in Mexico, promising “unprecedented cooperation with neighboring governments in our region.”
His demands, while often preceded by his usual aggressiveness, fall neatly into the security priorities of newly elected Mexican President Claudia Sheinbaum—namely the exclusion of corporations from the global financial system. This can be an important part of bilateral cooperation.
Read more: Mexico’s Election Crisis
However, Trump has again threatened to bomb criminals on Mexican soil. While it is unlikely to work (killing drug traffickers only increases violence), in Mexico’s most authoritarian state, this would be a disaster. This poses a serious threat to the friendly US-Mexico relationship.
There is a perception in Mexico that Trump is saying what the US does quietly under any administration. Under the Democrats, US-Mexico relations have reached a historic low, with the US Ambassador openly attacking the Mexican government for its lack of cooperation in the fight against organized crime. Sheinbaum denied that the US regularly violates Mexico’s sovereignty—the latest case being the alleged involvement of the US in an operation to kidnap a cartel leader on Mexican soil to face trial.
The wall of Mexico
And finally, of course, the US could force Mexico to pay for the costs of preventing migrants heading north. Arguably, Trump has already succeeded in this in his first term.
Today, under the threat of crippling tariffs, Trump said Mexico should take action to curb immigration to the US This is because the President-elect understands that Mexico has been successful in doing this recently.
First under President Andrés Manuel López Obrador and now under Sheinbaum, the new National Guard has been used almost exclusively to stop immigrants. The bottom line is that Mexico, at least as seen in the US, can turn the import faucet on and off at will. Whether this is true or can do without violence—the National Guard is accused of killing migrants—remains to be seen. Currently, Mexico is reportedly transporting 10,000 migrants every month from the US border to Guatemala.
The crackdown on migrants has undermined Mexico’s negotiating power on the issue, and Sheinbaum is working to strengthen his hand. Cuts were a defining feature of his latest administration’s budget, with the National Immigration Institute a stark exception. This came alongside the “Tapachula development pole” in southern Mexico, which is a migrant trap. However, instead of sending them back home, the development pole will provide jobs to the migrants, both stopping them on their way to the US but also solving labor shortage problems in certain regions of Mexico.
The Mexican government tends to be indifferent to migrants traveling through the country. Trump has undoubtedly forced it to address this issue, and has produced beneficial programs (and serious human rights concerns). The same can be said about wage increases, which are long overdue, and recent action against fentanyl, which is increasingly a problem in Mexico. Given that the precursors of the drug mainly come from China, this has become another link between trade and regional security.
Ultimately, the US will survive without Mexico. It would be the poorest, weakest, and least protected country in it. There is an understanding that both sides know this, so even if Mexico is a permanent center in this bilateral relationship, it may still be eager to sit on the other side of the negotiating table with strong aces up its sleeve—it may even feel a degree of hope. for better times in the uncertain future.
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