With the announcement Tuesday that Donald Trump has successfully talked the Carrier Corporation out of moving two plants from Indiana to Monterrey as planned, all eyes here are focused more tightly on how Trump’s election will affect Mexico.
Analysts say the reversal is small potatoes in the total U.S. economic picture but, considering that the Trump campaign has put Mexico in a harsh spotlight, educated Mexicans are glued to their screens for news on how the post-election shakeout will affect immigration and trade issues. Reporting that they are still “incredulous” over the Trump victory, many express a realization that some Trump promises were calculated simply to win votes from his populist base yet could have earthshaking results for Mexico.
“Everything here is focused on Trump now …” said Guadalajara civil engineer Andrés Rangel, “… television, newspapers, magazines, the Internet. We don’t have any idea what will happen … U.S. companies like Ford and Chevy have a lot invested here,” he observed, “and drastic changes like Trump suggests will have unpredictable effects.”
Trade issues are “far more important for Mexico than for the United States,” points out Jorge Castañeda, Mexico’s former foreign minister and current professor at New York University. Indeed, analysts say that in late 2015 that global automakers have 18 factories in Mexico (with more on the way) and employ 675,000 workers in Mexico (a hefty 0.5 percent of the population) compared to 903,000 in the U.S. (which amounts to just 0.2 percent of the population).
And, although a Mexican auto worker’s average salary is far less than a U.S. worker’s (only $US10.00 per hour in Mexico compared to as high as $US58.00 an hour in the States), it is nevertheless very good by Mexican standards, considering that the average hourly wage here is only 32 pesos or $US1.60.
“Trump claimed immigrants are the cause of all problems in America,” observed Rangel, “and he took advantage of the ignorance of some Americans.” But his proposal to raise the U.S. minimum wage would only end up making illegal immigration more attractive, he said.
Ditto for the reduction of good factory jobs in Mexico.
“The real problem with illegal immigration is why people move to another place, why they leave their home, their land, their family, why immigrants don’t have opportunities in their hometowns,” said a Mexican executive with wide experience in the United States and Central America, suggesting that if Trump’s policies result in fewer good factory jobs in Mexico, the unintended upshot could be more illegal immigration northward.
Rangel added another unforeseen result to the mix: “If Trump puts a 35-percent tariff on products manufactured in U.S.-owned plants in Mexico,” (which exports 80 percent of vehicles manufactured here), “it will make cars sold in Mexico relatively cheaper, since Mexicans won’t have to pay any tariff. But U.S. consumers will have to pay more. Are they going to like that?”
The North American Free Trade Agreement (NAFTA), also the object of much of Trump’s ire, could be a particularly thorny problem for Mexico. Castañeda insists that Mexico should refuse to renegotiate it and be prepared for the Trump administration to pull out. That, he insists, would be preferable to prolonged renegotiation, which would stifle foreign investment in Mexico for a long time.
Indeed, since it began in 1994, NAFTA has “created an integrated auto industry throughout Canada, the United States and Mexico,” say socialist analysts David Brown and Jerry White. And such integration largely offers convenience for industrialists. For example, the GM Silverado is assembled in several U.S. plants, in Silao, Mexico, and in Canada, Colombia, Argentina and Venezuela, enabling GM to shift production in response to fluctuating currencies and labor situations, including salaries.
Analysts say that the pressure from Trump that resulted in Carrier’s decision not to move its factories to Mexico represents a small, though genuine, move to shore up the U.S. working class and take on big business, but it will be to the detriment of Mexican workers, at least in the short term.
But the Guadalajara medical director of an international firm, José Luis Montañez, says that this change may not be bad for Mexico in the long run.
“Mexico needs more trade relations with countries besides the U.S. We are too dependent on America. Trump may force Mexico out of its comfort zone, but we need to look for ties with Europe and Latin America.”
“Mexico sends 80 percent of its exports to the United States,” said the international executive. “Forty percent would be excessive and we send twice that.”
He also pointed to a frequent anomaly in U.S.-Mexico trade: “Fresh Mexican mangoes go to the United States and are then sold back to us as canned mangoes. We export cows and cow carcasses to the United States and they sell them back to us as packaged cuts.”
Further drawing scrutiny and causing confusion among Mexican Trump-watchers, some of his campaign promises, including the one to build a wall along the U.S.-Mexico border, are undergoing mutations.
“The day after the election,” noted a thirtyish Guadalajara business owner, “one of his people said, ‘Maybe instead of a wall, we’ll build a fence. We’ll see.’”
Former foreign minister Castañeda has unabashedly labeled Trump’s wall a hostile act and lambasted Mexican President Peña Nieto’s weak reaction to the proposed structure (asserting, incidentally, that Mexicans could easily be forced to pay for it by increasing visa fees, tolls on border bridges and fees on monetary remittances from the U.S to Mexico.)
Yet Castañeda underscored in a recent interview with Aristegui Noticias that, “along the 2,000 kilometers of our common border, there already exist 700 kilometers with barriers.”
Rangel echoed this observation and focuses on the absurdity of the proposed wall. “This is no big news for Mexico. A wall already exists on much of the border, made of mesh, wire, panels and cameras. Trump wants to build a concrete wall. The funny thing is, a lot of Mexicans want to work on it. There’s a whole industry at the border built on illegal immigration — people providing lodgings, a mafia. The more prohibitions, the more mafia. If they build more wall, there will be more tunnels.”
Castañeda depicted other unforeseen results.
Writing in the New York Times, he said that with more wall, “the cost and danger of crossing without papers would rise, making smuggling even more lucrative for organized crime syndicates.”
With more prohibitions, individuals “no longer … simply wade across the Rio Grande,” agrees Kurt Eichenwald in Newsweek. “Instead, they … turn to the ruthless gangs” who charge “large sums for each person crossing … a huge enterprise, earning as much as US$6 billion a year.”
As for the deportations threatened by Trump, many Mexicans say that issue is similarly marked by misconceptions and unforeseen consequences.
“Obama is the president who has carried out the most deportations in history,” said Rangel. Castañeda agrees. Under Obama “some two million people” were deported, he writes.
However, if Trump deports 11 million undocumented immigrants in the United States (as estimated by Castañeda) or even just immigrants with criminal histories, this would ratchet up the criminal environment near the border.
“If they’re deported, the index of crime at the border goes up and they’ll need money,” said the executive. “That will be the first problem for Mexico after Trump arrives at the White House.”