Trump starts with flurry of activity
Serious concerns seen across border, in Texas
The United States has always been a bit of a bully when it comes to Mexico, seizing Texas and California from it in a bitter war memorialized in that country’s national anthem.
Over the last few decades, however, the neighbors’ relationship has matured, more teenage posturing than playground fist fights, as the countries sharing the world’s busiest border work closely on trade and security. When Republican presidential candidate Herman Cain suggested an electric fence on the Mexican border in 2011, it spurred such outrage that he quickly backtracked, saying, “That’s not a serious plan.”
Today the two couldn’t be at a more different place, and it is Texas that is ground zero for much of the conflict.
President Donald Trump, who took office
Friday, began his campaign by likening Mexicans to rapists and promising that country would pay for a border wall. He vowed to deport immigrants here illegally, block Mexican remittances and redo the North American Free Trade Agreement, credited for revamping Mexico’s economy. Since the election, such rhetoric hasn’t slowed, with Trump’s rebuke this month of car companies building plants there plunging the peso to its weakest in two decades.
“Mexico has taken advantage of the United States,” he said this month. “It’s not going to happen anymore.”
It’s all cause for serious concern in Mexico as the United States is by far its largest trading partner, and top officials will meet with senior members of Trump’s administration this week. But the prospect of how his presidency might act on Mexico is also worrying business leaders in Texas, whose leading export destination is its southern neighbor. Many say they are working behind the scenes to convince the Trump team that Mexico is not China and should be treated as an ally, not an enemy.
“We have to appreciate and we have to respect our Mexican southern border,” said Rick Figueroa, a Houston businessman on Trump’s Hispanic advisory council. “I don’t think we can ignore (Mexico) and say, ‘Hey, we’re the big bully. You have to do what we say. If you don’t like it, you don’t like it.’ I think that’s a big error … if Mexico loses, we lose too.”
‘Uncertainty, even volatility’
The relationship is not only interdependent, but far more than economic, said Figueroa, who noted that emphasizing the two’s importance to each other is what he plans to relay to Trump first.
Arturo Sarukhán, a former Mexican diplomat who worked on the NAFTA negotiations, called this moment a crucial one in U.S.-Mexico relations, one that could have a disastrous impact, not just on trade but on border security, anti-terrorism and drug war cooperation.
“I certainly am concerned about (Trump’s) ‘my way or the highway’ approach,” Sarukhán said. “I think it’s a danger and a threat … this could be a very damaging moment in the relationship.”
Antonio Garza, a Texan and former U.S. ambassador to Mexico under President George W. Bush who now works for the Mexico City law firm White & Case, said there used to be a clear understanding of the bilateral relationship.
“That is what is very different now,” he said. “The operative word is uncertainty, even volatility.”
Mexico’s President Enrique Peña Nieto has said that he would strengthen business ties with Latin American and Asian countries and use all of his bargaining chips in renegotiating its relationship with the United States.
“All the issues that define our bilateral relationship are on the table, including security, migration and trade,” Peña Nieto said in a recent speech to his diplomats. “It is evident that we have differences with the new United States government on some issues, such as a wall that Mexico absolutely will not pay for. At no time will we accept anything that goes against our dignity.”
Peña Nieto has named Geronimo Gutiérrez, head of the North American Development Bank who lives in Texas, as ambassador to the U.S. And he appointed former finance minister Luis Videgaray as foreign minister, signaling an effort to use personal relationships to influence Trump. The MIT-educated economist has ties to Trump’s son-in-law and senior adviser Jared Kushner.
“That is a back channel that Videgaray will be focusing on, to try to salvage whatever he can of the relationship with the United States,” said Tony Payan, director of the Mexico Center at Rice University’s Baker Institute for Public Policy.
He said Texas leaders are playing both sides, noting that Gov. Greg Abbott made his first international diplomatic visit to Mexico in 2015, touting the two’s strong economic ties. But he has not denounced Trump’s harsh rhetoric against Mexico. A spokesman for Abbott, whose wife is of Mexican descent, did not respond to requests for comment.
“Texas’ political leadership will eventually have to go to Washington and say, ‘Your economic plan is not good for Texas. We may be with you politically but we’re not with you on economic plans,’ ” Payan said. “Mexico and Texas are joined at the hip. We are as dependent on Mexico as Mexico is dependent on the U.S.”
More than 5 million U.S. jobs rely on trade with Mexico, including some half a million jobs in Texas. More than $400 billion in goods and services crisscross the border, about $179 billion between Texas and Mexico. Nearly half of all of Texas exports go to Mexico, which in turn buys more U.S. exports than Japan and China combined. The opening of Mexico’s vast energy sector also stands to benefit Houston energy companies in particular.
Hurd: Update NAFTA
If Trump’s rhetoric turns into action and he imposes large tariffs on companies moving to Mexico, that country could retaliate in turn, slapping fees on American exports, Payan said. The biggest losers would be machinery and vehicle manufacturers as well as farmers, since Mexico is the biggest buyer of U.S. agricultural products after China and Canada.
“One of the strategies could also be that Mexico begins to take a more nationalistic stand, that energy reform cannot simply be handed over to the Americans,” Payan said. “They may invite more European, Chinese and Australian companies to invest ... Texas would probably be the biggest loser.”
U.S. Rep. Will Hurd, a Republican from Texas who represents more miles along the southern border than anyone else in Congress, said it makes sense to update NAFTA, reflecting changes in the Internet and energy sectors, but only if it makes it more favorable to all countries involved.
“We shouldn’t be looking at antagonistic stances to one another,” he said.
Instead Texans must press Mexico’s importance to Washington and the nation.
“Everybody needs to be talking about this,” he said. “We can’t take for granted what we in Texas have seen for the last 20 years.”
Randy Velarde, president & CEO of The Plaza Group, an international chemical marketing firm in Houston who exports to Mexico, said his clients there are deeply worried.
“They really think a lot of what (Trump) has said will in some form or fashion take place,” he said.
Carlos Petersen, a Latin American analyst at the Eurasia Group, an international consulting firm, said he expects Trump to impose some trade restrictions on Mexico even as his cabinet appointments point more to concern with China. But none of them dispel concerns over Mexico, which was a central issue in Trump’s campaign and easier to target than Beijing.
Because of Mexico’s dependence on the U.S. market, to where it sends 80 percent of its exports, and its need for foreign direct investment and remittances to keep its economy from falling into recession, the country has less leverage, Petersen said.
“It makes it really hard to impose any conditions on the U.S. government and try to get a better deal than what (the U.S.) wants to do,” he said.
A negative outcome from a NAFTA renegotiation could bolster far-left politician Andrés Manuel López Obrador, who would run a nationalist presidential campaign like Trump in 2018 and whose potential victory would likely not be favorable to Washington.
Luis de la Calle, a former top Mexican trade official, said Trump’s statements and policies that have caused the peso to plummet could backfire. A declining peso hurts Mexicans’ ability to buy U.S. goods, which could grow the U.S. trade deficit. It’s also likely to spur more illegal immigration if Mexico falls into a recession. And it could in fact encourage more U.S. companies to move there if they face even lower costs of production.
“Realities are stubborn,” de la Calle said. “There’s a reason why we are so close.”
Artemio “Temo” Muniz, a Republican strategist in Houston and chair of the Federation of Hispanic Republicans, said he has formed a Texas-Mexico alliance that will have its first meeting here next month.
“The key is to make sure we have energy businessmen from The Woodlands and Mexican leaders and see if we can keep the culture of cooperation going,” he said. “We’re hoping cooler heads will prevail over time once Trump gets in there and realizes what is the real deal.”
Impact on drug war
Muniz sees positive signs in the nomination of former Gov. Rick Perry to head the Department of Energy and Rex Tillerson, the Texan-born former ExxonMobil CEO, as secretary of state. The two understand the importance of Mexico to the U.S., he said.
Perry declined an interview through a spokesman, saying he was focused on his confirmation hearing last week. Tillerson in recent testimony struck a more moderate tone than Trump, calling Mexico a “long-standing neighbor and friend.” Gen. John Kelly, confirmed as Homeland Security Secretary on Friday, previously headed the U.S. Southern Command and is also seen as grasping the bilateral relationship, especially when it comes to border security.
U.S. Rep. Henry Cuellar, a Democrat from Laredo, said the U.S. should be bringing Mexico closer, not pushing it away, noting it could help more to stop illegal immigration by setting up an equivalent to U.S. Border Patrol to guard its northern frontier and doubling down on migrants at its Guatemalan border.
A worsening relationship would be detrimental to drug war efforts, said Reggie Thompson, a Latin American analyst for Stratfor, a global intelligence company in Austin. Most of the human intelligence gathering is done by Mexican sources, he said. Just hours before Trump’s inauguration, Mexico announced it was extraditing notorious drug kingpin Joaquin “El Chapo” Guzman to New York, which some analysts saw as a message about just how much the countries cooperate on security.
Al Zapanta, head of the U.S.Mexico Chamber of Commerce and a likely pick for ambassador to Mexico, said all the rhetoric notwithstanding, he’s bullish about the two countries’ relationship.
But Peter Rodriguez, an economist and dean at Rice University, warned that even empty threats carry negative consequences.
“Increasing tension will encourage business people to question moves or deeper investments, even if policies don’t change much,” he said. “It’s the first time in a while that we’re seeing the potential reversal of the strong relationship between the two.”
“It is evident that we have differences with the new United States government on some issues, such as a wall that Mexico absolutely will not pay for. At no time will we accept anything that goes against our dignity.” Enrique Peña Nieto, president of Mexico