Financial journalist Tom Hudson writes in the Miami Herald that when two members of President Donald Trump’s cabinet visit Mexico this week, immigration may rightly dominate the headlines, but trade relations will pervade the talks.
Secretary of State Rex Tillerson and Department of Homeland Security Secretary John Kelly are scheduled to visit Mexico on Thursday Feb. 23.
It will be the highest profile face-to-face engagement between U.S. and Mexico since President Trump’s inauguration. Mexico canceled an earlier presidential visit to the White House after Trump tweeted “If Mexico is unwilling to pay for the badly needed wall,” then the meeting should be canceled.
And it was.
While the president’s wall and subsequent immigration executive orders ignited a firestorm, the trade trouble brewing between America and Mexico threatens to up-end more than a half-trillion-dollar business relationship.
Mexico is the second biggest consumer of “Made in U.S.A.” products. American cars and trucks, plastics, and food flow across the border. The Mexican appetite for American goods has jumped almost 500 percent since 1993, the year before NAFTA.
Over the same period, the Mexican economy has doubled.
While it is difficult to parse out Mexico’s importance to corporate America’s bottom line, the trade tensions with Mexico could spread throughout the continent.
And the tough talk with Mexico comes as Latin American business already is weak. Caterpillar third-quarter sales in the region fell 16 percent. Ford continues to lose money in South America. More than half the business Kansas City Southern railroad does between the two countries is southbound into Mexico.
Long-term investors know it’s not political rhetoric but economic results that matters.
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