{"id":851,"date":"2025-02-02T11:38:43","date_gmt":"2025-02-02T11:38:43","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/trumps-tariffs-would-reverse-decades-of-integration-between-u-s-and-mexico\/"},"modified":"2025-02-02T11:38:43","modified_gmt":"2025-02-02T11:38:43","slug":"trumps-tariffs-would-reverse-decades-of-integration-between-u-s-and-mexico","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/trumps-tariffs-would-reverse-decades-of-integration-between-u-s-and-mexico\/","title":{"rendered":"Trump\u2019s Tariffs Would Reverse Decades of Integration Between U.S. and Mexico"},"content":{"rendered":"<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">When Dennis Nixon started working at a regional bank in Laredo, Texas, in 1975, there was just a trickle of trade across the border with Mexico. Now, nearly a billion dollars of commerce and more than 15,000 trucks roll over the line every day just a quarter mile from his office, binding the economies of the United States and Mexico together.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Laredo is America\u2019s busiest port, and a conduit for car parts, gasoline, avocados and computers. \u201cYou cannot pick it apart anymore,\u201d Mr. Nixon said of the U.S. and Mexican economies. Thirty years of economic integration under a free trade deal has created \u201cinterdependencies and relationships that you don\u2019t always understand and measure, until something goes wrong,\u201d he said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Now that something is has happened. On Saturday, President Trump slapped 25 percent tariffs on Mexican imports as he looks to pressure Mexico\u2019s government to do more to stop migrants and drugs from coming across the border. Mr. Trump also hit most Canadian goods with a 25 percent tariff and imposed a 10 percent tax on Chinese imports.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">A longtime proponent of tariffs and a critic of free trade deals, Mr. Trump seems unafraid to upend America\u2019s closest economic relationships. He is focusing on strengthening the border against illegal immigration and the flow of fentanyl, two areas that he spoke about often during his 2024 campaign.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-1\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">But the president has other beefs with Mexico, including the economic competition it poses for U.S. workers. The president and his supporters believe that imports of cars and steel from Mexico are weakening U.S. manufacturers. And they say the United States-Mexico-Canada Agreement, the trade deal Mr. Trump signed in 2020 to replace the North American Free Trade Agreement, needs to be updated \u2014 or perhaps, in some minds, scrapped.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Many businesses say ties between the countries run deeper than most Americans realize, and policies like tariffs that seek to sever them will be painful. Of all the world\u2019s major economic partners, the United States and Mexico are among the most integrated \u2014 linked by business, trade, tourism, familial ties, remittances and culture. It\u2019s a closeness that at times generates discontent and efforts to distance the relationship, but also brings many benefits.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cOur countries have a symbiotic relationship,\u201d said Juan Carlos Rodr\u00edguez, managing director in Tijuana for Cushman &amp; Wakefield, one of the world\u2019s biggest commercial real estate companies.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cOur economies are so intertwined that it would take decades to decouple,\u201d Mr. Rodr\u00edguez said. \u201cSuch a scenario would have a catastrophic impact on Mexico.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-3\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Mexico\u2019s immense reliance on trade with the United States dates back at least to the 1960s, when manufacturers began opening factories just across the border as a response to climbing labor costs in the United States and Japan.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Trade picked up when NAFTA took effect in 1994. For many Americans, that trade pact is now synonymous with offshoring and decimated factory towns. But <a class=\"css-yywogo\" href=\"https:\/\/academic.oup.com\/restud\/article-abstract\/82\/1\/1\/1547758?redirectedFrom=fulltext\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">economists calculate<\/a> that many parts of the United States benefited as the agreement increased trade and economic activity.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Other parts of the United States were severely hurt as manufacturers moved to Mexico in search of cheaper labor. As factory towns hollowed out, that ended up fueling a trade backlash, helping pave the way for anti-trade candidates like Mr. Trump to win office.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In an interview, Peter Navarro, the president\u2019s senior counselor for trade and manufacturing, called NAFTA a \u201ccatastrophe\u201d and bad for both Mexico and the United States.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe fact of the matter is China was so much worse that people tend to forget how bad NAFTA was,\u201d he said.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-4\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">In his first term, Mr. Trump threatened tariffs on Mexico over border issues, but instead settled for a deal. He also repeatedly threatened to withdraw from NAFTA, but instead decided to renegotiate it. His advisers added provisions to the pact they believed would bolster U.S. steel and auto manufacturing, but some now say they have fallen short.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Since Mr. Trump was last in the White House, Mexico\u2019s importance to the U.S. economy has grown. The Covid-19 pandemic disrupted global supply chains and started a \u201cnearshoring\u201d boom.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Companies were already looking to move out of China, to avoid tariffs Mr. Trump imposed there, as well as rising costs and political risk. Manufacturers rushed to open plants in Mexico, seizing on the country\u2019s low-cost industrial base and proximity to the United States.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Those changes helped make Mexico the United States\u2019 top trading partner in goods in 2023. As trade between the countries has expanded, so has the bilateral trade deficit with Mexico, a metric that Mr. Trump is particularly focused on.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">American consumers may be as reliant on foreign products as ever. But economists argue that imports from Mexico can have quite different implications for the U.S. economy than imports from China.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-5\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">That\u2019s because there are many integrated supply chains that run back and forth across North American borders. Goods like cars, electronics and bluejeans are volleyed back and forth among the United States, Mexico and Canada as they are turned from raw materials into parts and then final products.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">According to economists at S&amp;P Global, of the imports coming into the United States from Canada and Mexico, more than 18 percent of their value was created in the United States, before being sent to those countries. That\u2019s far more than the proportion for other countries, and a sign of how closely the economies are integrated.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Proximity creates other benefits: Research by the <a class=\"css-yywogo\" href=\"https:\/\/www.dallasfed.org\/news\/speeches\/speeches-leaders\/2024\/240412coronado\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">Federal Reserve Bank of Dallas<\/a> has found that a 10 percent increase in factory output in Ciudad Ju\u00e1rez, Mexico, leads to a 2.8 increase in total employment in El Paso, Texas, concentrated in areas like transportation, retail and real estate.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThere\u2019s this perception that the border is all about walls and illegal crossings,\u201d said Diego Sol\u00f3rzano, the founder of Desteia, which helps companies making supply chain decisions. \u201cThis line in the sand is actually the most powerful economic corridor on Earth.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Roughly $800 billion worth of goods were transported across the border last year, Mr. Sol\u00f3rzano said, an amount that would position the U.S.-Mexico border in striking distance of the world\u2019s 20 largest economies.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-6\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The two economies rely on each other for their energy needs. Mexico, which <a class=\"css-yywogo\" href=\"https:\/\/mexicobusiness.news\/oilandgas\/news\/us-mexico-energy-interdependence-safeguard-against-tariffs\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">depends<\/a> on the United States for an estimated 70 percent of its natural gas consumption, is more vulnerable to any disruptions.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But the United States also imports about 700,000 barrels of crude oil a day from Mexico. Imposing import taxes on such cargoes could produce increases in fuel prices, particularly diesel, energy analysts warn.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Food production is also closely integrated. Mexico supplies roughly half of America\u2019s fresh fruit and vegetables, and that proportion <a class=\"css-yywogo\" href=\"https:\/\/www.progressivepolicy.org\/canada-is-the-top-export-market-for-36-u-s-states-and-mexico-for-six\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">rises in winter months<\/a>. Mexico also emerged last year as the top market for American agricultural exports, totaling $30 billion.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Bob Hemesath, a fifth-generation farmer in northeastern Iowa, said that Mexico was the biggest buyer of American corn and also a big purchaser of hogs, both of which he produces.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Tariffs would \u201cput an added cost on a product that doesn\u2019t need to be there, and it\u2019ll drive those countries to go look somewhere else,\u201d Mr. Hemesath said. He spoke by phone from his farm on an unseasonably warm day, where he had just finished power-washing a hog facility.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-7\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt puts me as a farmer at an economic disadvantage,\u201d he said. \u201cAlthough I understand wanting to use tariffs as a negotiating tool, what harm do you do?\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Some Trump officials think corn exports haven\u2019t been entirely benign. Mr. Navarro said that NAFTA had kick-started America\u2019s illegal immigration problem, because when the United States began exporting corn to Mexico after the trade pact took effect, that put Mexican agricultural workers out of jobs, sending some of them into the United States.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThat\u2019s where that began, our illegal immigration problem,\u201d he said.<\/p>\n<h3 class=\"css-15h6bi9 e1gnsphs0\" id=\"link-5932bd0\"><span>Trade irritants<\/span><\/h3>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-8\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Mr. Trump and his supporters have other criticisms of the United States-Mexico relationship. Some argue that Mexico has violated the terms of an agreement it made to limit its steel exports to the United States. They say Mexican shipments of steel to the United States have exceeded the levels set by that agreement, which was signed alongside the U.S.M.C.A.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">(The Mexican steel industry has its own complaints. On Tuesday, Canacero, a Mexican steel organization, claimed in a statement that it had seen a significant surge in exports of finished steel products from the United States that did not comply with the agreement.)<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-9\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">There are also growing concerns about Mexico\u2019s trade with China, particularly in the auto sector. Chinese car exports to Mexico have soared, and some Chinese car companies have been scouting for Mexican factory sites.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">That has fueled concerns that Chinese companies will use Mexico as a jumping off point to export to the U.S. market at much lower tariff rates than if they were shipping goods from China.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Brad Setser, an economist at the Council on Foreign Relations, said that Mexico\u2019s role as a conduit for Chinese goods to the United States had been overstated, but that \u201cthere absolutely is an issue in the autos sector.\u201d One out of three cars sold in Mexico last year came from China, he said. That means Chinese exports are now meeting Mexican demand for cars, rather than exports from the United States, a blow to the U.S. auto industry.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Other business owners argue that the United States and Mexico should work together to limit imports from China \u2014 but say that doesn\u2019t call for high tariffs on Mexican products.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Greg Owens, the chief executive of Sherrill Manufacturing, a flatware manufacturer in Sherrill, N.Y., said he would like to see tariffs structured in a way that inhibits China from using Mexico as a back door to the United States. But he opposes putting tariffs on Mexico outright, saying China is a much larger threat.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cChina packing up a flatware factory in Guangzhou, setting up shop in Mexico just to circumvent tariffs \u2014 that needs to be dealt with,\u201d he said. \u201cBut you can\u2019t destroy your trade relationship with Mexico.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>When Dennis Nixon started working at a regional bank in Laredo, Texas, in 1975, there was just a trickle of trade across the border with Mexico. Now, nearly a billion dollars of commerce and more than 15,000 trucks roll over the line every day just a quarter mile from his office, binding the economies of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":852,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[300,580,202,579,199,197,581],"class_list":["post-851","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-decades","tag-integration","tag-mexico","tag-reverse","tag-tariffs","tag-trumps","tag-u-s"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=851"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/851\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/852"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}