Advertisement
Donald Trump
WorldUnited States & Canada

In a trade war with Trump, Mexico’s president has a few weapons at his disposal

Top economic officials have said that Mexico would ‘mirror’ any additional taxes or tariffs that the United States imposes

4-MIN READ4-MIN
Mexico's President Enrique Pena Nieto. Photo: AP
The Washington Post

If the trade war with the United States is coming, how would Mexico fare?

That is the question that has preoccupied politicians and business leaders here since US President Donald Trump won the election and began pursuing his agenda to impose tariffs on goods made in Mexico and to build a wall across the border.

Trump has made clear his disdain for the North American Free Trade Agreement (Nafta), which has governed commerce on the continent since 1994, and Mexican leaders have said that if the terms of the renegotiation did not further their interests, they might walk away as well.

Advertisement
A trade dispute could have painful repercussions here in Mexico. The country relies heavily on the US market: 80 per cent of its exports are sold there, and some economists predict a trade war could lead to a recession and spur more migration north. Others note that unrest might break out as the country is already tightly wound amid sharp increases in gas prices, the peso devaluation and the unpopularity of its president, Enrique Peña Nieto.

Watch: Mexico’s President Enrique Pena Nieto responds to Trump’s border measures

But before that happens, Mexico will sit at the negotiating table with the Trump administration. While the United States is the stronger power, Mexico is not without leverage if this dispute escalates. Top economic officials have already said that Mexico would “mirror” any additional taxes or tariffs that the United States imposes. Former officials have said that Mexico could also tax corporate profits from the many American companies with operations in Mexico.

Advertisement
Select Voice
Select Speed
1.00x