Mexico-bashing could put thousands of jobs at risk

Mexico is going to have to get used to living like South Korea, “with a madman in charge north of the border”, said Tomás de la Rosa on Economiahoy.mx. Although he is supposedly a successful businessman, Donald Trump doesn’t seem to understand the basic rules of international trade. His tweeted threats to slap tariffs on Chinese and Mexican imports must be empty, since doing so would violate World Trade Organisation treaties and trigger an all-against-all trade war. But empty or not, these threats have a real effect on Mexican wallets. His tweets have caused the peso to slump to record lows against the dollar, leading to higher prices for consumers. When Trump goaded Ford into scrapping a planned $1.6bn plant in Mexico and investing in Michigan instead, the peso dropped a stomach-churning 3.5%.

Perhaps Mexico’s treasury should buy Twitter, said Jair López on Expansion.mx. That’s the joke among the nation’s currency traders. The Bank of Mexico has already spent some $2bn of its reserves trying to prop up the peso in the face of Trump’s 140-character outbursts. For about $15bn, it could buy the social media platform outright and just turn the darn thing off. It’s no laughing matter, said Ernesto O’farrill Santoscoy in El Financiero (Mexico City). If Trump imposes tariffs, Mexico would have “serious problems attracting productive investment”. Trump’s most protectionist proposals would struggle to get through Congress. But House Speaker Paul Ryan has himself proposed a border tax reform that, while not a tariff exactly, would give US firms a strong incentive to make and buy American.

Two can play that game, said Robert Morales in El Economista (Mexico City). Mexico is already preparing legislation to counter Trump’s attack. It could pass a border tax reform of its own, or give special breaks to Mexican manufacturers. Mexican firms have also begun to retaliate: construction giant Coconal and ecotourism firm Experiencias Xcaret have announced that they’ll no longer buy Ford vehicles. If this escalates into a full trade war it will hurt both sides, said the Financial Times. While Trump appears “to have Mexico over a barrel”, given that the US buys 80% of Mexican exports, “relations are not as asymmetrical as they seem”. Mexico is now the US’S second-biggest export market, equal to China, Germany and the UK combined. Half of America’s states count Mexico as their first- or second-biggest export market. US farmers have warned of “devastating” effects if trade is disrupted – “and US agriculture employs twice as many as the car manufacturing sector Mr Trump wants to protect”. Mexico-bashing may have helped him win the election, but if he keeps it up in office, he’ll imperil thousands of jobs, thereby sabotaging his oft-cited desire to “make America great again”.