Main menu

LatAm in Focus: Jorge Suárez-Vélez on the Mexican Economy in the Trump Era

Trump and Peña Nieto in August 2016

Trump visited Mexico in August 2016. (AP Photo)

February 10, 2017

The Mexican peso is making a comeback after taking a beating during the US election. A podcast w/@jorgesuarezv.
Playing with Mexican prosperity can be a very, very dangerous game for the US." —@jorgesuarezv tells @CarinZissis

The Mexican peso took a beating when Donald Trump won the U.S. presidency, shedding more than 16 percent of its value against the dollar between Election Day and Inauguration Day. Yet, something surprising has been happening since January 20: the peso’s been staging a comeback. One reason? Trump’s protectionist rhetoric stoked fears about the potential demise of the North American Free Trade Agreement (NAFTA), but the realization set in that, even without the 23-year-old accord, tariff limits exist as a result of World Trade Organization rules, says economist Jorge Suárez-Vélez.

A columnist with Mexico’s El Financiero, Suárez-Vélez spoke with AS/COA Online Editor-in-Chief Carin Zissis about what’s in store for the Mexican economy in the Trump era. He says another positive development is the sense that the new U.S. president is beginning to see that “playing with Mexican prosperity can be a very, very dangerous game for the United States on a whole number of fronts.” Moreover, if Mexico, whose trade pacts give it access to 46 markets, shifts to importing agricultural products from other countries, Trump-supporting states in the U.S. Midwest will feel the loss.

"When it comes to trade, I honestly think that Mexican negotiators could run circles around the American and Canadian ones.

But Mexico also has causes for concern. Both foreign direct investment and domestic investment will likely slow, dragging down Mexican economic growth. And, even with strong players at the trade negotiation table, the Mexican government’s low approval ratings—along with NAFTA worries, corruption woes, and immigration tensions—threaten to stir trouble as Mexico prepares for its presidential vote. Suárez-Vélez says: “It really can make 2018 elections very dangerous for Mexico.”