How Trump’s Bullying of Mexico Could Backfire

The U.S.-Mexico relationship greatly benefits the U.S. All that could change.



President Donald Trump, like his populist right-wing precursor Sarah Palin, is a barracuda. In business he was merciless in pursuing his own interests, outsmarting and out-competing large, slow-swimming rivals by ruthlessly pursuing advantages through tax breaks and subsidies. He also hounded hapless minnows, refusing to pay independent contractors, architects, and suppliers. He was a big, ferocious fish in his pond—the rough and tumble world of New York real estate—and he left behind a trail of destruction and bankruptcies in his wake. But he was never big enough to upset the entire balance of the economic ecosystem. That all changed when he entered the Oval Office.


Trump, however, still does not appear to understand the magnitude of the influence he now wields. His post-election behavior toward Mexico, to name a pressing example, has been petty and petulant, but also remarkable in its continued focus on demonizing U.S.’s neighbor to the south. Some observers thought Trump’s anti-Mexico rhetoric would disappear—or at least soften—after the inauguration. But Trump is still the same old New York real estate predator. He has maintained a hostile tone toward Mexicans, particularly those who would like to come to the U.S.; shamed American companies, like Carrier, Ford, and GM, that want to set up shops in Mexico; belittled Mexico’s government and people by demanding that they pay for a wall on the border; and signaled that he will squeeze out every last possible penny from this bilateral relationship for the U.S. His obsession with small victories may end up upending his country’s valuable, longstanding economic relationship with Mexico.


Trump appears to believe that Mexico will be unable or unwilling to respond. In his business dealings Trump proved adept at forcing suppliers and partners to eat costs and accept pay cuts. When relationships soured, such as his failed luxury condo project in Baja California, Mexico, Trump often moved on to new projects and new deals. He cannot do this with another country.


The irony is that Mexico, with its combination of a large pool of low-cost laborers and a small, well-educated professional class, is almost the perfect economically for the U.S. Mexican elites have helped create an unbalanced manufacturing economy that complements the U.S. rather than competing with it directly. Mexico never really tried to follow the example of South Korea and Japan, which created their own car companies and electronics giants that produced cheaper goods that undercut the goods produced in America. Such a rival on the U.S.’s southern border would spell trouble for American manufacturers. And it could materialize faster than you might think.


Read more from the source article published in New Republic Feb. 23 2017

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