When Dennis Nixon began to work in 1975 at a regional bank in Laredo, Texas, there was only a trade hull across the border with Mexico. Now almost one billion dollars trade and more than 15,000 trucks only turn a quarter of his office from his office every day and combine the economies of the United States and Mexico.
Laredo is America’s most busy harbor and a channel for auto parts, gasoline, avocados and computers. “You can no longer choose it,” said Nixon about the US and Mexican economies. Thirty years of economic integration In the context of a free trade agreement, “interdependencies and relationships that they do not always understand and measure until something goes wrong,” he said.
Now that something happened. On Saturday, President Trump hit 25 percent tariffs to Mexican imports when he puts the government of Mexico under pressure to do more to keep migrants and drugs from getting across the border. Mr. Trump also met most of the Canadian goods with a tariff of 25 percent and imposed a tax of 10 percent on Chinese imports.
Mr. Trump, a long -time supporter of tariffs and critics of free trade agreements and does not seem to be afraid of improving America’s closest economic relations. He focuses on strengthening the border against illegal immigration and the flow of Fentanyl, two areas about which he often spoke during his 2024 campaign.
But the president has other beef with Mexico, including the economic competition, which he has for US workers. The president and his supporters believe that the imports of cars and steel from Mexico weaken the US manufacturers. And they say that the agreement between the USA and Mexico Canada, the trade agreement, which Mr. Trump signed in 2020, replaces the North American free trade agreement, has to be updated-or may have been scrapped in some heads.
Many companies say that connections between the countries recognize more than most Americans, and guidelines such as tariffs they want to cancel will be painful. Of all the world’s large economic partners, the United States and Mexico are among the most integrated – in connection with business, trade, tourism, family relationships, transfers and culture. It is a proximity that sometimes dissatisfies and creates dissatisfied efforts to distance the relationship, but also brings many advantages.
“Our countries have a symbiotic relationship,” said Juan Carlos Rodríguez, managing director of Tijuana at Cushman & Wakefield, one of the world’s largest commercial real estate companies.
“Our economies are intertwined in such a way that it would take decades to decouple,” said Rodríguez. “Such a scenario would have a catastrophic influence on Mexico.”
The immense trust of Mexico in the trade with the United States dates from the 1960s, when the manufacturers started to open factories directly across the border, in response to the costs of workers in the USA and Japan.
The trade increased when the NAFTA came into force in 1994. For many Americans, this trading pact is now a synonym for offshoring and decimated factory towns. But Calculate economists The fact that many parts of the United States benefited with the agreement increased the trade and economic activity.
Other parts of the United States were seriously injured when the manufacturers moved to Mexico in search of cheaper workers. When the factory cities hollowed out, this made a lack of trade that contributed to the fact that anti-trade candidates like Mr. Trump paved their way to win an office.
In an interview, Peter Navarro, the senior consultant for trade and manufacturing the president, described NAFTA as a “catastrophe” and bad for Mexico and the United States.
“The fact is that China was so much worse that people tend to forget how bad NAFTA was,” he said.
In his first termMr. Trump threatened the tariffs in Mexico for border issues, but instead decided on a deal. He too repeatedly threatened To withdraw from the NAFTA, but instead decided to renegotiate it. His consultants added the pact of the pact of which they believed that they were steel and car production, but some now say that they were neglected.
Since Mr. Trump was last in the White House, the importance of the Mexican economy for the US economy has grown. The Covid 19 pandemic disturbed the global supply chains and started a “nearshoring” boom.
Companies already wanted to move out of China to avoid the tariffs imposed there, as well as rising costs and political risk. The manufacturers hurried in Mexico to open the plants in Mexico and to confiscate the cost -effective industrial nose of the country and the proximity to the United States.
These changes have contributed to making Mexico to the United States. Top trading partner in Waren In 2023. When trade between the countries is expanded, the bilateral trade deficit with Mexico, a metric, on which Mr. Trump is particularly concentrated.
American consumers may need foreign products as well as always. However, economists argue that imports from Mexico can have very different effects on the US economy than imports from China.
This is because there are many integrated supply chains that run back and forth across North American borders. Like cars, electronics and Bluejeans, among the USA, Mexico and Canada, are transformed into parts and then into end products by raw materials.
According to economists from S&P Global, more than 18 percent of their value in the USA from Canada and Mexico were created to the United States in the United States before they were sent to these countries. This is much more than the proportion of other countries and a sign of how closely the economies are integrated.
The closeness creates different advantages: research by the Federal Reserve Bank of Dallas It has found that an increase in factory production in Ciudad Juárez, Mexico, leads to an increase in overall employment by 2.8 in El Paso, Texas, which focuses on areas such as transport, retail and real estate.
“There is this perception that the border is only about walls and illegal intersections,” said Diego Solórzano, the founder of Desteia, who helps the company to make supply chain decisions. “This line in the sand is actually the most powerful economic corridor on earth.”
Was worth around 800 billion US dollars last year were transported across the border, said Solórzano, an amount that would position the border between the 20 largest economies in the world in the USA-Mexico.
The two economies rely on each other for their energy requirements. Mexico, what depends on In the United States, an estimated 70 percent of their natural gas consumption are more susceptible to disorders.
The United States also import around 700,000 barrels of crude oil from Mexico a day. The disease of import taxes on such loads could lead to increases in fuel prices, especially diesel, warn energy analysts.
Food production is also closely integrated. Mexico delivers about half of the fresh fruit and vegetables of America and this relationship In the winter months rises. Mexico also appeared as a top market for American agricultural exports and a total of 30 billion US dollars last year.
Bob Hemesath, a fifth generation farmer in the northeast of Iowa, said that Mexico is the largest buyer of American corn and also a great buyer of HOGS, whom he both produced.
Customs would “give an additional cost of a product that does not have to be there, and these countries will make these countries look elsewhere,” said Hemesath. He spoke by phone about his farm on an unusually warm day when he had just finished a pig factory.
“It brings me as a farmer in an economic disadvantage,” he said. “Although I understand that tariffs want to be used as a negotiating instrument, what damage do you add?”
Some Trump officials believe that corn exports were not entirely benign. Mr. Navarro said that NAFTA started the illegal immigration problem of America, because when the United States exported Mais to Mexico after the Ca -pact came into force, the Mexican agricultural workers from jobs and sent some of them to the USA.
“This started our illegal immigration problem,” he said.
Trade stimulus
Mr. Trump and his supporters have other criticisms of the relationship between the USA and Mexico. Some argue that Mexico had violated the conditions of an agreement to limit his stahlexports to the United States. you say
(The Mexican steel industry has its own complaints. On Tuesday, Canacero claimed a Mexican steel organization, in a statement that it had a significant increase in exports from finished steel products from the United States that did not meet the agreement.)
There are also growing concerns regarding the Mexico trade with China, especially in the car sector. The Chinese automobile exports to Mexico have risen and some Chinese car companies have searched for Mexican factory locations.
This has fueled concerns that Chinese companies will use Mexico as a starting point for exporting on the US market for much lower collective bargaining prices than if they send goods from China.
Brad Setser, an economist on the external relationship of the Council for external relationships, said that Mexico’s role as a channel for Chinese goods in the United States had been overvalued, but that “there is absolutely a problem in the car sector”. One of three cars sold in Mexico last year came from China, he said. This means that Chinese exports are now encountering Mexican demand for cars instead of exports from the USA, a blow to the US car industry.
Other business owners argue that the United States and Mexico should work together to restrict imports from China – but say that this does not require high tariffs for Mexican products.
Greg Owens, the managing director of Sherrill Manufacturing, a record dealer in Sherrill, NY, said that he would like to see tariffs in such a structured manner that China Mexico used as a back door in the USA. But he rejects to collect Mexican tariffs directly and to say that China is a much greater threat.
“China packed a record factory in Guangzhou in Guangzhou and set up a shop in Mexico just to avoid the tariffs – that has to be treated,” he said. “But you cannot destroy your trade relationship with Mexico.”
