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News Article

How Could US Elections Impact Commercial Relations?

By Sofía Hanna | Wed, 11/04/2020 - 18:18

Mexico has enjoyed a commercial advantage following the trade war between China and the US, becoming the new provider of products that used to arrive from Asia. With the US elections about to be decided, there are still questions of what will happen between Mexico and the US, trade-wise.

If Donald Trump were reelected, Mexico would probably remain the US’ main provider. But this brings a downside, according to El Heraldo. If Trump wins, he will continue to use this preference as a way to pressure Mexico in other matters that may or may not be commercially related, such as migration, drug trafficking and organized crime, said Ignacio Martínez, Coordinator of UNAM’s Laboratory of Commerce, Economics and Business, to Expansión. This "preference" in commercial agreements could turn into constant tariff threats to persuade the Mexican government in other issues.

According to El Heraldo, if this were to become the new reality, the best thing governments could do would be to use agreements and tools, like USMCA, to clarify how trade would work. Another possibility that could be beneficial in the long run would be for Mexico to diversify its exports to avoid such a strong dependency on the US, according to El Heraldo.

On the other side of the spectrum, if Joe Biden won the elections, there could be a different result. "With Biden, there could be a change of strategy, which would impact the current trade dynamic," said Gustavo Flores-Macías, Professor at the University of Cornell, to BBC News.  Biden has stated how important China is. Still, there is no specific information on what he will do with the tariffs currently in place, showing a possible interest in establishing a working relationship once more, said Kathleen Claussen, Professor of the University of Miami, in an article by El Financiero.

"Mexico would have to be very innocent to not be prepared for Biden to become president. Surely, the country will encourage the use of clean energy while the government of López Obrador is betting on the use and exploitation of fossil fuels, which in the medium term could bring problems regarding non-compliance with USMCA commitments," said Mario Jorge Yánez, Partner at Hogan Lovells, to El Financiero.

Another factor to consider is how the relationship between López Obrador and the candidates can affect this situation. Trump has had a complex relationship with Mexico but even so, both him and López Obrador have made it clear that their relationship is respectful and cordial, according to BBC News. "We have a good relationship with the US government, with this one and any other that could come along. If it were not president Trump, I would not have a problem either," said López Obrador, according to the BBC article.

But from a democratic party standpoint, López Obrador’s government is very intertwined with Trump's government, so there would have to be a revision on how a new relationship could start, according to Arturo Sarukhán, ambassador of Mexico in the US between 2007 and 2013, in a BBC News article.

The data used in this article was sourced from:  
El Heraldo, Expansión, BBC, El Financiero
Photo by:   8385, Pixabay
Sofía Hanna Sofía Hanna Junior Journalist and Industry Analyst