How Mexico is Preparing for Tariff Negotiations with Trump

For the second time in less than a decade, Mexico is threatening its neighbor with sky-high tariffs, mass deportations and a military crackdown on cartels as it prepares to negotiate with President Donald J. Trump.

The stake in Mexico’s 130 million people is huge. Among major economies, Mexico is particularly dependent on the United States, exporting 80 percent of its exports to the US market.

Mexico’s top negotiators are taking an assertive stance in negotiating with Mr Trump this time around. Some may draw from experience with the first Trump administration: Mexico’s populist president at the time, Andrés Manuel López Obrador, warmed to Mr. Trump, and Mexico avoided high tariffs by accepting demands to limit immigration.

“We will find a solution because we have structural advantages,” Economy Minister Marcelo Ebrard said this month, citing issues such as greater economic ties between the two countries and a reduction in fentanyl deaths and migration.

Mexican President Claudia Schinbaum set the tone for this approach. While the Mexican government has failed to meet with the incoming Trump administration, it has pushed Mr Trump for conciliatory words and vowed that Mexico could respond with retaliatory tariffs of its own.

“We coordinate, we cooperate, but we never rule,” Ms. Shinbaum said in a speech this month.

At the same time, Ms. Scheinbaum’s government has already moved, expanded, to respond to some of Mr. Trump’s concerns. Migration prevention efforts and increasing seizures of illicit opioids.

A cornerstone of this strategy is the new administration in Washington’s bet on Mexico and its rapidly expanding low-cost industrial base if America wants to challenge its biggest rival, China.

Here are four things that will inform Mexico’s preparation for dealing with the new Trump administration.

Mexico is becoming increasingly important to the US economy.

Mexico’s economic relationship with the United States has changed significantly since Mr. Trump’s last term in the White House, particularly as the coronavirus pandemic disrupted global supply chains.

Mexico will overtake China as the United States’ largest trading partner for goods in 2023, as manufacturers shift operations to Mexico to be closer to the US market.

The trade relationship has grown stronger over the past year, with Mexico displacing China as the United States’ top source of revenue and the top destination for the United States. Food export.

“It’s an unprecedented level of interdependence,” said Diego Marroquin Bittar, a scholar on North American trade at the Wilson Center, a Washington research group.

The Mexican government is underscoring these trade ties, arguing that U.S. tariffs on Mexico could raise inflation and hurt U.S. consumers.

But those deep ties leave Mexico with heightened vulnerability.

One could be remittance. Mexicans working in the United States They sent $63 billion back home in 2023, more than double when Mr. Trump took office eight years ago, and mass deportations could reduce that figure.

So are tax-remittance proposals, including a bill sponsored by Vice President-elect JD Vance. Getting motivated.

Migration flows and fentanyl-related deaths are decreasing.

Despite Mr Trump’s repeated warnings about immigration from Mexico, illegal crossings at the US-Mexico border are at their lowest level since the summer of 2020. Nearly 46,000 people crossed the border illegally in November, the lowest number under President Biden.

The Biden administration’s denial of asylum to immigrants has contributed to this decline. But so are Mexican policies that have tried to dissuade immigrants from reaching the US border, especially from other Latin American countries.

Mexico was disintegrated. Immigrant caravans And he expanded the shadowy bus program that transported thousands of refugees from the country’s northern border to the deep south.

Just in the last quarter of 2024, Mexico strengthened The move will arrest nearly 475,000 migrants, more than double the number carried out in the first nine months of the year, officials said. Most of these are refugees. Released quicklyallowing them to stay in Mexico; Only a small fraction will be deported to their homeland.

Another issue Mr. Trump has repeatedly raised is the impact of illegal drugs, particularly fentanyl, flowing across the border. After reaching alarming levels, overdose deaths from illegal drugs are also on the decline. In the 12 months ending June 2024, they were down 14.5 percent from the same period a year ago.

Experts attribute the decline to expanded treatment, prevention and education efforts in the United States. While more evidence is needed, U.S. efforts to control the chemical precursors to fentanyl from Chinese and Mexican cartels may be limiting supplies.

Ms. Scheinbaum has begun targeting the fentanyl trade. Last month, Mexican security forces seized 20 million doses of the drug in the country’s largest synthetic opioid seizure.

Cartel violence is still on the rise in large areas.

Border crossings or a reduction in fentanyl overdoses will make no difference if Mr. Trump chooses to focus on the cartel bloodbath that is taking over large parts of Mexico as a reason to impose tariffs on exports.

Recent clashes between rival cartel factions have turned the northwestern state of Sinaloa into a war zone. Brutal political assassinations threaten Guerrero in southwestern Mexico.

Turf battles in Guanajuato, an auto manufacturing hub northwest of Mexico City, are marked by a Massacre Later other In recent weeks.

In the past, and one more time As Mr Trump campaigned for his new term, he raised the prospect of military action against cartels, restricting the flow of illegal drugs into the US. The designation of these groups as “terrorist organizations” may pave the way for such activities.

The Mexican government has long viewed such an opportunity as a violation of its sovereignty. But some former officials with experience negotiating with Mr. Trump warn that Mexico should take such threats seriously.

Ms. Sheinbaum highlighted Marco Rubio’s willingness to cooperate with Mr. Trump’s pick for secretary of state last week to curb cartel activities.

“We’ll take him at his word,” Mr. Sheinbaum said of Mr. Rubio.

In the year “Trump 2.0 is going to be a different Trump,” said former Economy Minister Ildefonso Guajardo, who negotiated with the Trump administration in 2017 and 2018. It would be unbalanced in terms of trying to let the team know the results. Some Decisions”

And while fentanyl deaths are on the decline in the United States, the drug still kills tens of thousands of people each year. The explosion of violence in Sinaloa shows how the groups responsible for the fentanyl trade remain active and well-armed.

A recent flood of Chinese cars imported into Mexico has added to tensions with China’s moves in key North American industries.

Mexico, which has a $105 billion trade deficit with China, has moved quickly in recent weeks to address concerns that China could use its position in Mexico to gain greater access to U.S. markets.

Mexico has imposed visible tariffs. Targeting Online Chinese retailers such as Temu and Xin announced a new industry policy last week aimed at Reduction Imports from China strengthen supply chains to the United States.

With such moves, the Mexican government seeks to drive home the argument that the United States needs Mexico to counter China’s growing economic threat. But will this be enough for Mr. Trump?

If not, and if the relationship with Washington is significant, Mexico still has the “nuclear option” to strengthen its economic relationship with China. basis To Scott Morgenstern, professor of political science at the University of Pittsburgh.

“As Beijing seeks to exert more influence in Latin America, Mexico could become Washington’s biggest economic rival,” Mr. Morgenstern said.