NAFTA Abolishment Looms Less Large as Trade Posturing Subsides Between U.S. and Mexico

Now that Mexican negotiators aren’t reacting specifically to President Trump’s heated rhetoric over foreign trade policies, their terror and rage has begun to subside. The North American Free Trade Agreement might even continue to exist for the time being.

Trump’s previous attacks on NAFTA, import tariff threats, and promise of a border wall incensed Mexican officials to a point where many suggested Mexico should simply abandon the renegotiation talks on principle. However, now that cabinet officials will be speaking on behalf of the president and the focus of the negotiators have shifted toward the fundamentals — and not the politics — Mexico can relax a little.

Despite some initial arm-folding and anger over immigration and border policing, Mexican Foreign Minister Luis Videgaray has remained engaged with the White House throughout the hostilities. The same cannot be said for Mexico’s Economy Minister and chief trade negotiator Ildefonso Guajardo. He has repeatedly said that he would immediately withdraw from talks if the United States made any attempt to add tariffs.

Recently, Guajardo has taken a more optimistic approach to the possibility of a modestly tweaked trilateral deal — even if the changes did favor North America somewhat.

However, it’s not just Mexico that’s softening its tone and making the situation appear less dire. Automotive News has cited market analysts noting a marked change in the U.S. trade prose over the last couple of weeks, especially now that cabinet officials such as Commerce Secretary Wilbur Ross are doing the talking instead of Trump.

“We find the change in tone between Ross’ comments and Trump’s campaign rhetoric striking,” said Benito Berber, senior Latin American strategist at Nomura Securities.

According to Berber, Ross seems more focused on improving NAFTA by tightening rules of origin and adding chapters on trade that favors the U.S. — especially in regard to tech, services, and energy. He also hasn’t mentioned taxing Mexico on imported items or a complete overhaul of the treaty.

For now, Mexican manufacturing is humming along and automotive industry leaders aren’t yet taking their current investments elsewhere. Future business is a different story, though. Numerous factories planned for Mexico have been cancelled and there is even more business waiting just out of frame to see how this NAFTA business goes down. The Trump administration can also decide to fiercely support Paul Ryan and his border tax adjustment proposals whenever it wants.

Still, it’s nice to have a break.

[Image: Jrsnchzhrs/ Flickr ( CC BY-ND 2.0)]