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

Matt Posky
by Matt Posky
nafta abolishment looms less large as trade posturing subsides between u s and

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)]

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4 of 11 comments
  • Astigmatism Astigmatism on Mar 22, 2017

    Point of order for the fourth paragraph: Mexico is part of North America. Unless your point is that free trade benefits all of North America generally, in which case this is probably correct.

    • DenverMike DenverMike on Mar 22, 2017

      In the business world, Mexico is a separate market, outside of "North America", or USA/Canada, which are basically one and the same, regulations-wise. Selling your products or services in Mexico is a whole other ballgame for most US/Canada based or global corporations. Some Markets (like Europe) consider Mexico part of "Central America", which doesn't really exist as a continent or otherwise.

  • Sceptic Sceptic on Mar 23, 2017

    This is quite brilliant move by Trump. Getting concessions, better trade conditions for the U.S. Current administrations trade/migration policies will also benefit Mexico, other Latin American countries by promoting better, fair trade, allowing to develop their economies, keeping their best and brightest home. This is what real leadership is! Get used to it.

    • Lon888 Lon888 on Mar 23, 2017

      Even if used tongue in cheek, I beg of thee to never use words "brilliant" or "leadership" when talking about Trump. Agent Orange is going to be lucky to just finish out his term...

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