Mexico will struggle to diversify trade
With over 80% of Mexico’s exports going to the United States, US protectionism could do untold harm to Mexico’s economy
Source: Trading Economics, UNCOMTRADE
Outlook
The protectionism of US President Donald Trump has made acute Mexico’s long-recognised need to diversify its trade relations. While the rest of the world does present trade opportunities, the obstacles that have prevented Mexico from breaking its US dependence still stand, and new ones are emerging.
Mexico’s geographical position -- once key to its economic success -- may become a hindrance, impeding trade with distant Asian and European markets, particularly of bulky exports such as cars. Moreover, foreign manufacturing investment could suffer if Trump introduces heavy taxes on Mexican imports.
While words of solidarity from Latin America may bolster hopes of stronger regional ties, modest economic growth and clashing interests suggest such rhetoric may not evolve into anything more concrete.
Impacts
- Import taxes will spur smuggling of otherwise legal goods into the United States, diversifying cartel activities and boosting their profits.
- The weak peso could cushion the blow of import taxes temporarily, buying Mexico some time to pursue new trade deals.
- The United Kingdom’s need for quick post-Brexit deals, and inexperience in negotiating them, could either benefit Mexico or frustrate talks.
See also
- Mexico will prioritise US ties over China - Sep 23, 2022
- Mexico will retain passive foreign policy - Jul 23, 2020
- Mexico’s auto industry faces dual challenges - Jul 15, 2020
- EU deal boosts Mexico trade diversification prospects - Apr 29, 2020
- Mexican export growth faces threats in 2019 - Apr 15, 2019
- EU trade deal to boost Mexican diversification - Aug 9, 2018
- TPP brings risks and rewards for Mexico - Apr 25, 2018
- Prospects for Mexico in 2018 - Nov 23, 2017
- Speedy Mexico-EU trade deal promises risks and rewards - Nov 3, 2017
- Mexico plans to break US trade dependence - Oct 13, 2017
- NAFTA talks will raise Mexican labour reform pressure - Sep 20, 2017
- Tense NAFTA talks renew uncertainty for Mexico - Aug 21, 2017
- Trump threat will drive Mexico trade diversification - Jun 23, 2017
- Prospects for Mexico and Central America to end-2017 - Jun 15, 2017
- Migration drives Central America-Mexico tensions - Mar 15, 2017
- Brazilian foreign policy faces new challenges - Mar 14, 2017
- Anti-Mexico moves would be a net loss for US economy - Mar 6, 2017
- Uncertainty will dog Mexican economy in 2017 - Mar 2, 2017
- Trump trade threats pose many challenges for Mexico - Feb 10, 2017
- More graphic analysis