Donald Trump’s latest threat to introduce new tariffs on Mexican goods unless Mexico solves the Central American refugee outflow is a blunder that puts the U.S.’s longstanding relationship with its southern neighbor at risk.
Up until now Mexico’s populist president Andres Manuel Lopez Obrador (AMLO), has tried to govern as a charismatic centrist, promising poor, rural constituents a radical transformation of Mexico’s economy and society but also working to assure business chambers and foreign ratings agencies that he intends to preserve macroeconomic stability, fiscal stability, and work within Mexico’s current arrangement of free trade deals.
Even as he routinely bashes the errors of the “neoliberal” policy agenda Mexico has pursued for the past three decades, AMLO has continued to voice nominal support for NAFTA, the landmark trade agreement that links Canada, the U.S., and Mexico. As he announces a government funding tree-planting initiative and piecemeal agricultural support programs, AMLO is also prodding his country’s legislature, which his party dominates, to pass the USMCA, the update to the NAFTA trade deal that Trump fought for.
AMLO is a charismatic but quick-tempered old school politician. Thus far he has showed incredible restraint in his dealings with the Trump administration. He has only responded to Trump’s provocations and insults with diplomatic platitudes about preserving the friendship between neighboring countries. But Trump’s latest temper tantrum over Central American refugees and threat to slap new tariffs of up to 25% on Mexican exports to the U.S. may open up an interesting opportunity for Mexico to retaliate.
Trump has long claimed to champion U.S. industry and support U.S. jobs, but over the last few weeks he’s shown that he prioritizes building his border wall and blocking the arrival of asylum-seekers above all else. While some Republican leaders have voiced their support for Trump’s capricious policy agenda and endorsed his threat to introduce new punitive tariffs on Mexico, at the local level in many parts of the south and mid-west business leaders may be more concerned with the future of the US-Mexico economic relationship.