616,000 million dollars. This is the size of Mexico’s trade surplus with the United States since the T-MEC came into force, from July 2020 to November 2024.
616,000 million dollars is the difference between what Mexico sells to the United States and what it buys from it. What will Donald Trump do with this data? The next president of the United States is convinced that his country’s trade relationship with Mexico is unbalanced against the United States and he wants to do something about it.
What could Mr. Trump do? Binational trade figures make it clear that Mexico’s surplus has been growing significantly over time. It was $54 billion in 2014. It was $112 billion in 2020, the last year of Trump’s first term. We will close 2024 with a differential greater than 160,000 million and the Republican will be able to argue that the growth of the gap has to do with weaknesses of the Democrats or problems in the implementation of the agreement that he negotiated.
In the coming months, the review/renegotiation of the T-MEC will begin. Long before those sessions begin, we will have the decision on tariffs that will be announced on the first day of his administration, January 20. It is very likely that they will impose some fees, even if it is for a few months and at a rate of less than 20 percent.
The review-renegotiation of the T-MEC will be marked by what happens with the tariffs. In any scenario, Trump will have achieved what he says in his book The Art of the Deal. He will have the initiative and we will be on tenterhooks. No wonder, beyond the tariffs and the review, we will have other measures from the US government, in the context of Maganomics.
Maganomics they call the combo that could come with the second Trump government. Maga comes from Make America Great Again and includes new ideas and actions that he could not implement in his first term from 2017 to 2021. The main ideologue of the Trumpian foreign trade doctrine is Peter Navarro. A man who believes that the United States should be much more protectionist and who is convinced that the trade war with China requires more discipline on the part of the United States and its main partners. In the Navarro doctrine, it is inadmissible for Mexico to admit Chinese presence in sectors that are strategic for the United States. If you allow me a metaphorical reinterpretation of Navarro’s thought: A Mexican-American couple does not admit a Chinese man into the bedroom. Maganomics proposes a reduction in corporate taxes from 21 to 15% and greater incentives for companies that invest in the United States. Be careful: this support could benefit non-US companies, so we could not rule out that there are some Mexican businessmen who begin or increase their investments in US territory.
How many companies in Mexico will succumb to the charm of Maganomics? We closed last year with the news that Liverpool was participating in the purchase of the Nordstrom chain for a total of 6.4 billion dollars. This is part of a growing trend, where companies such as Cemex, FEMSA, Chedraui are committed to growing beyond the Rio Grande. Between 2019 and 2023, Mexico advanced four positions in the ranking of investors in the United States. It went from box 19 to number 15. Mexican investments in US territory amounted to 57,686 million dollars in 2023, a radical change with the situation that existed only in 2006, when that figure did not exceed 10,000 million dollars. (The data is from Pedro Casas Alatriste, director of the American Chamber in Mexico).
Maganomics contains carrots, but also sticks. There will be bullying for those who decide to move their production to other countries and there will be corporations that succumb to pressure. Eight years ago, in January 2018, Ford Motor Company canceled the development of a plant in San Luis Potosí for fear of retaliation from the Trump administration. Other companies like Carrier resisted and maintained their plans for Mexico. Eventually, Ford resumed its pace in Mexico, although the San Luis Potosí project never returned.
How will companies react to the pressure of a Donald Trump who is much more powerful now than eight years ago? This is one of the questions that are in the air. In his first Presidency, Donald Trump had to face a Congress in which his party did not have control of both chambers and in which there was much more resistance in the corporate world to ideas related to Make America Great Again. In 2018, Silicon Valley was overwhelmingly pro-Democrat, and now it’s clear that something has changed among big tech entrepreneurs. The best example of this is Elon Musk, who contributed tens of millions of dollars to Trump’s campaign and will now work with him.
Crucial days are coming. Moments in which we must be focused on one of the most important challenges of our modern history: does it make sense to be distracted by an airline that does not know how to fly and a car factory that will run at 40 km/h?
