Tear down the Mexican wall
An unintended consequence of Donald Trump’s accession to the US presidency is a surge in Mexico’s profile among Europeans. Until recently, the Latin American nation was probably most associated with its distinctive cuisine in Europe’s popular imagination. But from the announcement of his presidential candidacy in June 2015 onwards, Trump has popularised the idea of building a wall with Mexico.
Perhaps the one benefit of this development is that Europeans will take Mexico more seriously. If they do they will see it is fundamentally different from other emerging markets. Its relationship with the US is characterised by both an incredible closeness and, paradoxically, an increasing physical separation.
There are numerous close ties between Mexico and its northern neighbour. Over 80% of Mexico’s exports go to the US while almost half of its imports come from across its northern border.
These trade ties, in turn, partly reflect investment flows. The stock of US foreign direct investment in Mexico increased from $17.0bn in 1994 to $92.8bn in 2015, according to the US Congressional Research Service.
Much of this involves the US investing in Mexican enterprises which, in turn, export back to American consumers. Many firms have integrated supply chains, most notably in the auto industry, where they take inputs from both sides of the border to produce finished goods.
While the US is vital to Mexico, the relationship is also important in the opposite direction. Mexico is the US’s third-largest trading partner, after Canada and China, while there are numerous other types of links. For example, more than 16m Mexicans migrated to the US between 1965 and 2015, according to the Pew Research Center.
In contrast, those who assume the physical separation between Mexico and the US is starting with President Trump should reconsider. Two Hollywood movies set on the US-Mexican border illustrate the point. In A Touch of Evil, an Orson Welles film released in 1958, the characters pass between the US and Mexico with no visible border. In Sicario, released in 2015 when Trump was still considered a rank outsider as presidential candidate, a heavily fortified border is already prominent.
In this case, fiction reflects reality. For example, the Secure Fence Act of 2006 led to the construction of 1,100km of physical barriers on the border. Among its supporters was Hillary Clinton, Trump’s opponent in the presidential election.
Protectionism did not start with Trump either. Clinton also became a vocal critic of the North American Free Trade Agreement (NAFTA), despite having supported it in the first place, as was Barack Obama before her.
However, although the current president did not initiate the US estrangement from Mexico, he is taking it to new heights. Closer ties offer the two countries great opportunities for increasing mutual prosperity. Conversely, an acrimonious fall-out could destabilise both of them.