Furious at Trump, Mexicans Ask How to Break Dependence on the U.S.

The country is questioning its decades-old dependence on the U.S. market—and starting to look elsewhere.

By 

Nacha Cattan

https://www.bloomberg.com/news/articles/2019-06-19/with-trust-broken-mexico-s-elite-asks-what-to-do-about-trump?utm_medium=email&utm_source=newsletter&utm_term=190622&utm_campaign=bop

Mexico City’s Zocalo has been the focus of national protests and celebrations since the Spanish conquest. The mood on the capital’s central square now is one of anger at the U.S. under Donald Trump.

After Trump forced a renegotiation of the Nafta trade agreement, only to threaten tariffs unless Mexico did more to clamp down on migration across its borders, a temporary deal was struck that defused the immediate crisis. But it left Mexicans furious, and starting to question their decades-old dependence on the U.S. market.

As U.S. president, Trump “should serve as an example, but he does just the opposite,” said Jose Luis Solorzano, a 58-year-old street cleaner who works on the Zocalo. He cited social and economic impacts of Trump’s policy, with many Mexicans finding it harder to visit family in the U.S. “This is hurting us, and the relationship between U.S. and Mexico,” he said.

Mexico is just one target of Trump’s combative foreign policy, with the threat of tariffs to press American interests used as a cudgel against traditional allies and foes alike. Mexicans initially brushed off Trump’s message as political rhetoric. But with 2020 presidential election ensuring that Trump’s gaze will again look beyond the border, Mexico’s government is rethinking the nature of its U.S. relations.

U.S. badgering is a particular dilemma for Mexico, experiencing its second major crisis with its northern neighbor since Trump threatened to end free trade in 2017. Mexico has pledged to clamp down on immigrants to avoid tariffs and President Andres Manuel Lopez Obrador insists he wants to remain friends with Trump. But that stance risks being out of tune with many ordinary Mexicans who form Lopez Obrador’s political base and it does little to assuage feelings approaching panic among some in the business community.

Mexico already had the worst perception of Trump among those surveyed by Pew Research Center in October; only 6% said he’s a capable leader. And the percentage of Mexicans who think relations with the U.S. is poorly quadrupled in the past four years. Giant Mexican flags are a feature in many public squares in a country where nationalism runs deep and where anti-American sentiment only faded in recent decades. Not for long.

“Latent anti-Americanism that was dormant over the past 30 years has a great possibility of resurfacing,” said Andres Rozental, a deputy foreign minister under Mexican President Carlos Salinas, who negotiated Nafta with the U.S. and Canada. “Everything that was built over the past 30 years is being destroyed by the U.S. president because he’s taking political advantage of this strategy to accuse Mexico of the evils taking place in the U.S.”

The question in Mexico as elsewhere is what the government is prepared to do about it. The answer increasingly suggests that Trump’s approach is causing not just short-term anger, but risks long-term damage to U.S. relations worldwide. One example: Germany, France, and the U.K. back a special purpose vehicle meant to circumvent U.S. sanctions on Iran, while the European Union is pursuing efforts to bolster the euro and reduce dependence on the dollar.

In Mexico’s case, it exported some $28 billion in farm products to the U.S. last year, mainly beer, avocado, tomatoes, tequila, and berries. It imported $19 billion in U.S. agricultural products, including corn, soy, and beef.

At an exclusive business club in Mexico City last week, where Lopez Obrador hailed the temporary deal as breaking the impasse with Trump, privately the talk was of diversification to ensure Mexico’s economic future. Some even questioned whether Mexico and the U.S. are allies at all.

“What’s become very clear to the Mexican business sector is we need to turn our eyes to other markets and not depend so disproportionately on trade with the U.S.,” said Jose Manuel Lopez Campos, president of Mexico’s services and tourism chamber. He referred to Mexico channeling the vast majority of its exports to the North American market over past decades as “a public policy mistake.”

Mexico has been trying to boost its relationship with China—Foreign Minister Marcelo Ebrard plans to visit after the Group of 20 summits in Japan this month. Lopez Campos said it’s part of a general push into Asia, though the U.S. has taken note. Alfonso Romo, the president’s chief of staff, said he was asked in April by U.S. Commerce Secretary Wilbur Ross not to allow China to invest in strategic projects in Mexico.

Bosco de la Vega, president of the National Agricultural Council, said that Mexico will sign free-trade agreements with Brazil, Argentina and Ecuador shortly, while the agricultural sector is pushing for a deal with South Korea. Mexico and China have recently approved a banana trade protocol and sorghum are next.

Mexico’s high concentration of exports to the U.S. “has become a weakness and we are seeking a strategy of diversification,” he said in an interview. Not much was done after Trump’s first threats in 2017, but now “we’re being disciplined about it. It’s our strategy. We’re serious about this.” Deputy Finance Minister Arturo Herrera said Tuesday that finding trade partners other than the U.S. will help diversify risk.

Despite the fair warning about Trump’s intentions as far back as 2015, Mexico remains as reliant as ever on the U.S. Recent efforts to diversify haven’t reduced exports from the 80% mark where it’s been for the past century, said Rozental, the former deputy foreign minister.

While it’s too soon to say whether the latest Trump salvo will prompt real policy shifts, it’s triggered a nationalistic resurgence throughout Mexico. The country has a sense of itself as a haven for dissidents, including refugees from Spain under dictator General Franco, that puts it at odds with Trump’s stance, even if polls suggest Mexican attitudes to migration are hardening.

Opinion surveys suggest voters want Lopez Obrador to stand up to Trump, and even diplomats like Rozental say that Mexico should have called Trump’s bluff on tariffs. Porfirio Munoz Ledo, the speaker of the lower house from the president’s own party slammed the negotiation of a deal he said places Mexico in a “semi-colonial” position.

Back on the Zocalo, Uriel Lopez Onofre, a 24-year-old masters student, stood in the shadow of the giant Mexican flag that dominates the square to shelter from the midday sun and “contemplate his country.” He said that Lopez Obrador was smart not to confront Trump over migrants from Central America, but he “could use a bit more push-back.” The Mexican president seems to be saying “hit me but I won’t hit you back.”