US Secretary of State Rex Tillerson and Homeland Security Secretary John Kelly visited Mexico this week, where they met with the country’s president, Enrique Peña Nieto, and other senior officials.
Kelly and Tillerson’s meetings with Mexican officials come as the Trump White House seems ever more committed to imposing measures detrimental to Mexico’s interest.
But the Mexican government looks to be assessing steps to raise the stakes for Trump and gain leverage in any future negotiations — whether they be over restructuring the NAFTA trade deal or the construction of a border wall.
Mexican Foreign Minister Luis Videgaray, during a press conference with his US counterpart, said US-Mexico ties were at a “complex moment in the relationship.”
In private, he was more assertive.
“Time has been wearing down on President Donald Trump himself,” Videgaray told members of the Chamber of Deputies on Wednesday, according to audio and transcripts obtained by Mexican newspaper La Jornada.
“He has had some important stumbles that have placed him in a reality of a system of weights,” Videgaray said — stumbles that have shown him “the nonomnipotance of a president of the United States, that he is a fenced-in president.”
Videgaray said that the Trump administration’s aggressive posture would give the Mexican government a “very important argument of legitimacy” when addressing potential allies in the American academic and businesses communities, as well as in the US Congress.
He also said the Peña Nieto administration was considering a more assertive response to one of Trump’s more controversial proposals.
“If they place on us a tax on Mexican exports,” Videgaray said, “we are going to put one on them, but better, because we are going to choose [those exports] which hurt them.”
Videgaray’s remark mirrors a call made by Economy Minister Ildefonso Guajardo in January, when he said Mexico should be ready to “take a fiscal action that clearly neutralizes” a potential border tax.
Products like corn from the US farm belt, where people voted heavily for Trump, may be the prime targets.
And while corn producers say they doubt Mexico would go through the pain and expense of shopping elsewhere, many are reluctant to test that theory.
Already, investors have appeared to hedge against a possible trade war.
Mexico has other potential avenues through which to gain leverage with Washington.
“For instance, just after Trump was elected, one of the senior figures in Chinese diplomacy travelled to Mexico and was received by Peña Nieto. There are talks about trade negotiations with China,” Roberto Simon, lead political analyst for Latin America at FTI Consulting, told Business Insider. “There are now also talks about increasing or enlarging the deal Mexico has with the EU, and Mexico is also negotiating with Mercosur, the South America trade bloc.”
“We’re clearly seeing that the Mexicans are saying, ‘OK, even if the United States is out of the TPP, this is something that we want to move forward … we think that Asia will be one of the epicenters of growth in the next decades, over the next decades. So we’ll maintain this very pro-trade approach regardless of what the United States decides,'” Simon said.
Others have suggested that, rather than taking active measures to counter Trump’s policies, Mexico could strike back in a more passive way.
“Mexico could take an alternative path that would provide far more effective retaliation against President Trump, while leading to fewer barriers and more growth,” Dean Baker, the codirector of the Center for Economic and Policy Research, a left-leaning think tank, wrote at the end of January. “Mexico could announce that it would no longer enforce U.S. patents and copyrights on its soil. This would be a yuge deal, as Trump would say.”
Baker noted that dropping patent enforcement would erode incentives for technological innovation and creative work, but in the near term, he wrote, consumers and medical patients in Mexico (and others who visit) would benefit at the expense of corporations from the US and elsewhere.
Mexico, of course, cannot wage a prolonged war of words or policy with the US.
“The time, from the point of view of the negotiation, clearly runs in our favour,” Videgaray said in his remarks to federal deputies on Wednesday.
But, he added, “not indefinitely.”
Many investors and others were waiting to see how would things would play out, he said, noting the importance of Mexico’s manufacturing sector, which has felt the strain of tensions between the US and Mexico.
Like US farmers, Simon was doubtful about how far Mexico would break from US products — 80% of Mexico’s exports, he noted, go to the US.
It would take a lot to offset even a small change to US-Mexico trade flows, he told Business Insider.
“Even though the Mexicans want to diversify,” Simon said, “it would take a long time to do so.”
“I don’t want to claim here that I am saying we are going to smack the table and we are going to succeed and we are going to achieve what we want,” Videgaray told lawmakers on Wednesday. “You know as well as I, that we are not going to change Donald Trump’s form of thinking, we are not going to convince him, and he is going to continue being president of a long time.”
“But we have to recognise that we have strategic advantages and strengths in this dialogue process,” he said.
Business Insider Emails & Alerts
Site highlights each day to your inbox.