Some of President Donald Trump’s plans for America could fuel a trade war with Mexico, which would be damaging to both countries. Mexico would be hurt more by a trade war, but America wouldn’t be unscathed. Tensions have developed between Mexico and America because President Trump wants to build a wall on the border and apply tariffs to Mexican imports. Mexico has retaliated by pointing out they can increase tariffs on American imports too.
Mexico is Prepared to Retaliate If the U.S. President Continues with Wall Plan and Throwing Out NAFTA
In response to President Trump’s plans to build a wall between America and Mexico, the Mexican President Enrique Pena Nieto said:
“I regret and disapprove of the decision by the United States to continue with the construction of the wall, which has for years, far from uniting us, divided us.”
Mexico is open to renegotiating NAFTA but has warned that if the proposed changes didn’t further their interests, they would walk away from the deal. They have also stated that they would mirror any taxes or tariffs that the U.S. imposes on Mexican imports to America. Another way that Mexico can retaliate, as former officials pointed out, is by introducing a tax to corporate profits on American companies operating in their country.
Mexico’s options in retaliating aren’t limited to financial issues. They could make the illegal immigration problem that President Trump is unhappy about worse by no longer catching people who are attempting to sneak into America. According to the South China Morning Post, Mexico deported almost 150,000 migrants who were illegally heading toward America. Most of the migrants originated from Central America. Officials estimate that illegal migration to the United States could double without Mexico’s cooperation.
Our southern neighbor could also start refusing to cooperate on the drug war. They have worked with America at the border to inspect food and gather intelligence on drug cartels. President Nieto’s administration has arrested high-ranking cartel leaders, such as the head of the Sinaloa cartel Joaquín “El Chapo” Guzmán. Mexican law enforcement also helps decrease the import of heroin into the United States by arresting local producers.
Possible Repercussions of Withdrawing from NAFTA and Building the Wall
During his campaign trail, Donald Trump expressed dislike of NAFTA (North American Free Trade Agreement), a trade deal between Canada, America, and Mexico. It was signed by former U.S. president Bill Clinton in 1993 and went into effect in 1994. NAFTA eliminated almost all tariffs on goods traded between the three countries. President Trump criticizes the trade agreement for making it easy for American companies to move jobs to Mexico where labor is cheaper, then selling these goods in America.
The South China Morning Post reported that 80% of Mexico’s exports are sold in the United States. Imposing a tariff on these exports would hurt Mexico’s economy and likely push it into a recession. Ironically, the recession could drive more people to illegally enter the United States in search of jobs, something President Trump doesn’t want. Even if he has the wall built before imposing tariffs, Mexicans could fly to Canada and sneak into America through the northern border.
Trump’s actions have caused some Mexicans to feel like he doesn’t want friendly relations with them. Political analyst and College of Mexico college professor, Sergio Aguayo, stated:
“It’s evident that Mr. Trump wants vassals, not neighbors. What’s surprising is that he doesn’t understand that Mexico has a good number of measures at its disposal. We depend on each other in many ways. More than Trump imagines.”
A Trade War Between the U.S. and Mexico is on the Brink of Breaking Out
President Trump’s actions have created tensions between the U.S. and Mexico. If he continues with his plans of imposing a tariff on goods made in Mexico and building the wall, Mexico will retaliate. This could cause a trade war between the two countries. And neither side would turn out the winner.
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