When Dennis Nixon in 1975 began working at the Regional Bank in Laredo, Texas, there was only a trade of a shop across the border with Mexico. Now, nearly one billion dollars of trade and more than 15,000 trucks roll only a quarter mile from its office every day, together binding the economy of the United States and Mexico.
Laredo is the most prominent American port, and a car parts guide, gasoline, avocado and computers. “You can’t choose it anymore,” Mr Nixon said about American and Mexican economies. Thirty years of economic integration under the Free Trade Agreement created “interdependence and relationships you do not always understand, until something goes wrong,” he said.
Now that it becomes something: 25 percent of the Mexican products, which President Trump plans to impose on Saturday while he looks to press the Mexican government to do more to suppress illegal immigration. Mr. Trump is expected to also hit Canada with 25 percent of the levy and impose a 10 -pointed tax on Chinese imports.
The longtime advocate of Tariff and a critic of the Free Trade Agreement, Mr. Trump seems not to be afraid of increasing the closest economic relations of America. It is focused on strengthening the border against illegal immigration and the flow of fentanis, two areas he often spoke about during the 2024 campaign.
But the president has other beef with Mexico, including the economic competition he represents for US workers. The president and his supporters believe that the import of car and steel from Mexico weakens American manufacturers. And they say that the United States-Moxiko-Kanada agreement, a trade agreement signed by Mr. Trump in 2020 to replace the free trade agreement in North America, should be updated or may, in some minds, be abolished.
Many companies say that connections between the countries lead deeper than most Americans understand, and politics such as tariffs that seek to separate them would be painful. Of all the world’s main economic partners, the United States and Mexico are among the hardest – related to work, trade, tourism, family relationships, remittances and culture. It is a closeness that sometimes creates dissatisfaction and effort to distance relationships, but also brings many advantages.
“Our countries have a symbiotic relationship,” said Juan Carlos Rodríguez, Director General of Tijuana for Cushman & Wakefield, one of the world’s largest commercial real estate companies.
“Our economy is so intertwined that it would take decades to separate,” said Mr. Rodríguez. “Such a scenario would have a catastrophic impact on Mexico.”
The immense relying of Mexico to the United States trade dates from the 1960s, when manufacturers began to open factories just over the border in response to the rise of labor costs in the United States and Japan.
The store picked up when the oil came into force in 1994. For many Americans, this trade pact is now synonymous with offshoring and a fee of factory cities. But Economists calculate That many parts of the United States have benefited because the agreement has increased trade and economic activity.
Other parts of the United States, such as parts of the industrial northwest, were seriously injured as manufacturers moved to Mexico in search of cheaper workforce. As the factory cities have moved out, it eventually encouraged a trade return reaction, helping to put their way to candidates against trade such as Mr. Trump to win a duty.
In an interview, Peter Navarro, President’s Senior Trade and Production Advisor, called his oil “disaster” and bad for Mexico and for the United States.
“The fact is that China was so worse that people tend to forget how bad the oil was,” he said.
In his first termMr. Trump threatened tariffs to Mexico for border questions, but instead got rid of the deal. He also repeatedly threatened to withdraw from Nafta, but instead he decided to negotiate him. His advisers added the provisions to the Pact, which they believed would strengthen our steel and auto production, but some now say they have passed.
Because Mr. Trump was in the White House for the last time, Mexico’s importance for the American economy grew. Coid-19 pandemic disrupted the global supply chains and started “close”.
The companies have already sought to move from China to avoid the tariffs that Mr. Trump has imposed there, as well as increasing costs and political risk. The manufacturers rushed to open the plant in Mexico, capturing a low industrial base in the country and the proximity of the United States.
These changes helped me to become a United State Mexico ‘ The best trade partner in the goods 2023. As the trade between the countries has spread, so is a bilateral trade deficit with Mexico, a metric that Mr. Trump is particularly focused on.
American consumers can rely on foreign products as always. But economists claim that imports from Mexico can have completely different consequences on the American economy from imports from China.
This is because there are many integrated supply chains moving forward and back across the North American borders. Goods like a car, electronics and bluejeans take forward and back and back among the United States, Mexico and Canada, because they are transformed from raw materials into parts and then final products.
According to S&P GLOBAL economists, imports coming to the United States from Canada and Mexico, more than 18 percent of their values were created in the United States before being sent to these countries. This is far more than a ratio for other countries and a sign of how integrated economies.
Proximity creates other advantages: research by Federal Reserve Bank in Dallas He discovered that a 10 -long increase in factory production in Ciudad Juárez in Mexico leads to 2.8 increasing total employment in El Pas in Texas, concentrated in areas such as transport, retail and real estate.
“There is this perception that the border is engaged in walls and illegal crossings,” said Diego Solórzano, founder of Desteia, who helps companies make decisions about the supply chain. “This sand line is actually the most powerful economic corridor on Earth.”
The goods worth about $ 800 billion were transported across the border last year, said Mr. Solórzano, which would set the border of the US-mexico in a striking distance of the world’s 20 largest economies.
Two economies rely on each other because of their energy needs. Mexico, who it depends In the United States for about 70 percent of natural gas consumption, it is more susceptible to any disorders.
But the United States also imports about 700,000 barrels of raw oil daily from Mexico. Importing taxes on imports of such burdens could produce an increase in fuel prices, especially diesel, warning energy analysts.
Food production is also closely integrated. Mexico supplies about half of American fresh fruits and vegetables, and that proportion It grows in the winter months. Mexico also appeared last year as the best market of American agricultural exports, a total of $ 30 billion.
Bob Hemesath, a fifth generation farmer in northeast Iowa, said Mexico is the largest buyer of American corn and also a large pig buyer, which produces.
The tariffs would “put an additional cost on a product that should not be there, and those countries will make them look elsewhere,” said Mr. Hemesath. He spoke on the phone from his farm to an unusually warm day, where he just finished loading the pig plant.
“It puts me as a farmer in an economic disadvantage,” he said. “Although I understand that I want to use tariffs as a negotiating tool, what damage do you do?”
Some Trump officials think that corn exports were not completely benign. Mr. Navarro said Nafta was launched by the US illegal immigration problem, because when the United States began exporting corn to Mexico after it came into force of the trade pact, Mexican agricultural workers expelled from work, sending some of them to the United States.
“This is where our illegal problem of immigration began,” he said.
Trade irritants
Mr. Trump and his supporters have other criticisms on the relationship of the United States-Mexico. Some claim that Mexico has violated the terms of the agreement, which he concluded to limit his steel export to the United States. They say that the Mexican shipments of steel to the United States exceeded the levels set by this agreement, which is signed together with USMac
(Mexican steel industry has its own complaints. On Tuesday, Canacero, a Mexican steel organization, claimed that it recorded a significant increase in exports of finished steel products from the United States not in accordance with the agreement.)
There is also a growing concern about the Mexico trade with China, especially in the auto sector. Chinese car exports to Mexico grew and some Chinese cars scout Mexican factory locations.
This prompted the concern that the Chinese companies would use Mexico as a point to export to the US market in much lower tariffs than if they had shipped goods from China.
Brad Setser, economist of the Council for External Relations, said the role of Mexico as a guide for Chinese goods to the United States was overrated, but “there is absolutely a problem in the car sector.” One of three cars sold in Mexico last year came from China, he said. This means that Chinese exports now fills Mexican demand for cars, not export from the United States, a blow to the US auto industry.
Other owners of companies claim that the United States and Mexico should work together to limit imports from China – but they say it does not require high tariffs to Mexican products.
Greg Owens, Sherrill Manufacturing CEO, a meal manufacturer at Sherrill, NY, said he would like to see tariffs structured in a way that inhibits China to use Mexico as the rear door to the United States. But he opposes putting the tariff on Mexico, saying that China is a much greater threat.
“China packed a meal factory in Guangzhou, setting a trade in Mexico just to bypass the tariffs – to be resolved,” he said. “But you can’t destroy your trade relationship with Mexico.”
