The Great Wall of Mexico
Ever since the beginning of 2016, when Donald Trump started to gain strength in the US presidential race, Mexico has been faced with protectionist threats.
Among the most divisive promises of the now US president, is his engagement to build a wall along the US Mexican border and to make its Southern neighbour
pay for the bill. This has triggered a wave of concerns over the potential impacts on the Mexican economy.
To justify his threats of protectionism, Trump claims that this will help protect the jobs in the manufacturing sector shifting the blame to the unemployment
rates on the NAFTA agreement and as a result has repeatedly threatened to leave the organisation. Rounds of NAFTA renegotiations between the three
members (Mexico, United States and Canada) began in mid-August 2017. Since then, Trump has revived his previous extremist standpoint.
On 27th August, he tweeted that the two trade partners were being very difficult and threatened to pull out of NAFTA. The US president has also suggested that he might shut down the government if Congress does not agree to fund the border wall. Despite this recent escalation in protectionist rhetoric, the Mexican peso and the 5- year CDS has remained on track (see chart). This sound behaviour has been supported by resilient economic activity and the general lack of belief in the US president´s ability to move forward with his divisive plans.
What Risks does this pose?
Download the latest Coface Panorama report – “How Could “TRUMPONOMICS” affect Latin America’s economies?” HERE
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