A Victim of Trump (and Fundamentals), the Peso Falls

11/14/2016 Forbes.com, Mexico Institute Blog

By Viridiana Rios, Global Fellow, Mexico Institute

pesoI write today as a middle class Mexican whose savings lost 10 percent of their value when American voters elected a leader who pledged to renegotiate NAFTA and tax us to pay for a wall. As a result of the election and other factors, the Mexican peso has overtaken the Argentine peso and the South African Rand to become the emerging markets 2016 worst performer.

The Mexican Peso was a barometer for the presidential campaign. It lost 10 percent of its value when Clinton lost, 1.9 percent in the week after the FBI reignited Clinton’s email controversy, and hit its historical low in the days following the election as speculation turned to the potential impact of Trump’s first months in office. The peso spiked 1.3 percent in less than an hour during the first presidential debate, and when Trump’s lewd conversation about women broke, it gained 2.2 percent.

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The Case for Partnering with Mexico

11/7/2016 The National Interest

By Public Policy Fellow Ambassador Earl Anthony Wayne

mexican flagMexico has been a punching bag in the United States election campaign this year. Rather than hitting our neighbor with insults and threats, however, we should be cementing partnership with Mexico to strengthen our economy and security. The American public has been fed misleading explanations, factual distortions, and bad solutions. A number of the proposed actions regarding Mexico would harm the United States rather than address the challenges we face in creating good jobs, making our economy more competitive, and enhancing border security.

U.S. trade with Mexico supports a net 4.9 million American manufacturing and service jobs spread widely across the United States, according to the Woodrow Wilson Center’s Mexico Institute. Those jobs exist because, under NAFTA, Mexico has become the second largest purchaser of U.S. exports in the world, with Canada being the largest. We trade over a million dollars a minute with Mexico, and the breadth of U.S.-Mexican cooperation is unprecedented, covering trade, public security, immigration, energy, the environment, international affairs, and much more.

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Read our paper “How Trade in Mexico Impacts Employment in the United States”

Check out our project “Growing Together: Economic Ties between the United States and Mexico”

NEW PUBLICATION | Growing Together: How Trade with Mexico Impacts Employment in the United States

growing-together-employment-sectionBy Christopher Wilson

Read the essay

The United States and Mexico trade over a half-trillion dollars in goods and services each year, which amounts to more than a million dollars in bilateral commerce every minute.  With such a large volume of trade, it is not hard to believe that the number of jobs that depend on the bilateral relationship is similarly impressive. New research by the Mexico Institute shows precisely that: nearly five million U.S. jobs depend on trade with Mexico.

The study shows that if trade between the United States and Mexico were halted, 4.9 million Americans from across the country would be out of work.

This essay analyzes the employment impact of bilateral trade on the U.S. economy. Read the essay here.

Key Findings

  • Nearly five million U.S. jobs depend on trade with Mexico… Our model shows that if trade between the United States and Mexico were halted, 4.9 million Americans would be out of work.
  • Many times, it is the availability of cost-efficient inputs that allows U.S. companies to stay competitive enough to fend off competitors from outside the region and to grow exports in the face of fierce global competition. In this way, not just exports but also imports from Mexico help support jobs in U.S. industry.
  • The auto industry, which is probably the single most integrated regional industry, is a perfect example of the benefits of trade integration. Without the availability of nearby Mexican plants to do the final assembly of light vehicles, it is quite possible that the vast U.S. parts producing network for these vehicles would migrate to someplace outside of the continent.
  • Misperception and scapegoating has certainly played a role in creating the current negative political environment around trade…but so has the very real failure of U.S. policymakers to adequately address the challenges facing middle-class Americans.

This essay is part of our project Growing Together: Economic Ties between the United States and Mexico, which explores the bilateral relationship in detail to understand its nature and its impact on the United States. Throughout the fall of 2016, the Mexico Institute will release the findings of our research on our website and social media, using the hashtag #USMXEcon.

Read the essay

Depressed Energy Prices Cause Decline in U.S.-Mexico Trade


2/23/2016 Forbes.com

By Christopher Wilson, Deputy Director, Mexico Institute

forbesFrom 2009-2014, U.S.-Mexico trade skyrocketed. Bilateral trade grew 75%, faster than U.S. trade with any other major trading partner, including China (61%), and importantly, both imports and exports were growing rapidly. In 2015, trade growth came to a screeching halt, though strong fundamentals suggest this may be more of a temporary blip than a new trajectory.

The Census Bureau recently released U.S. merchandise trade statistics for 2015, and though Mexico is still the United States’ second largest export market and third largest overall trading partner, for the first time since the economic crisis of 2008-2009, U.S.-Mexico trade declined from the previous year’s level. Interestingly, as shown in the graph below, U.S.-Canada trade dropped sharply in 2015, allowing China to become the United States’ top trading partner. In 2014, the two countries traded $534.3 billion, but in 2015 that number fell to $531.1, a decline of some $3.2 billion dollars. U.S. imports from Mexico basically held steady, growing from $294.1 to $294.7 billion, although this apparent stagnation masks multiple underlying trends. Exports, on the other hand, dropped some $3.8 billion. This brief analysis examines recent trends in bilateral trade and their implications for the future of U.S. and Mexican economies.

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U.S. Natural Gas Exports to Mexico Taking Off

08/03/15 Forbes

Export Or Import DirectionsJust as Space X rockets may be taking off from the beaches at Boca Chica near Brownsville, natural gas exports to Mexico look to also sky rocket in the coming years. Due to changes in Mexican law in 2013 opening the electricity market to private investment, billions of dollars in contracts have been let to build power plants, electrical distribution facilities and natural gas pipelines. In turn U.S. pipeline companies and gas producers have moved to capture the lion’s share of that market. Given the fact that Texas and Gulf Coast producers have been rapidly losing their old Northeast and Midwest markets to Marcellus producers this has proven to be a timely and vital new market. The Energy Information Agency (EIA) estimates that natural gas exports to Mexico were 3% of production in April 2015 and are expected to grow to 5% by 2030.

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Mexico October factory exports soar by most in five-years

11/26/14 Reuters 

Reuters/Tomas Bravo
Reuters/Tomas Bravo

Mexican factory exports expanded by the most in over five years last month while consumer imports also rose, in a sign that a recovery in Latin America’s No. 2 economy may be gaining steam. Factory exports jumped 5.38 percent in October from September in seasonally adjusted terms off a contraction the prior month, the national statistics agency said on Wednesday, marking its biggest jump since August 2009. The rise was fueled by a 8.5 percent increase in auto exports, its best showing since February, and a 3.93 increase in non-auto factory exports. Most of Mexico’s exports are manufactured goods and nearly 80 percent of its exports are sent to the United States.

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Mexico Aims for Agreement on Sugar Exports to U.S.

10/01/14 Wall Street Journal 

sugarMexican Economy Minister Ildefonso Guajardo said Wednesday that Mexico is seeking a negotiated settlement to a dispute over Mexican sugar exports to the U.S., but that failure to reach an accord could lead Mexico to take the case to the World Trade Organization. The U.S. government in August imposed preliminary tariffs on Mexican sugar imports following complaints by U.S. sugar growers that the Mexican government subsidizes the domestic industry, allowing Mexico to flood the U.S. market with cheap sugar, harming U.S. producers.

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