Mexicans Mixed On Trump's Plan To End NAFTA
MICHEL MARTIN, HOST:
Now let's spend some time looking at how Donald Trump's election has been received in a number of world capitals. First to Mexico. The president-elect's pledge to rip up the North American Free Trade Agreement, which he repeated often, has gotten much attention there. While it isn't clear how far Donald Trump can or will go to fulfill that promise, Mexicans are already getting a taste of what that could mean economically. NPR's Carrie Kahn reports from Mexico City.
CARRIE KAHN, BYLINE: On election night, Mexico's peso began to slide. And as it looked more likely that Donald Trump was going to win, it took a plunge. By this weekend, it hit a new low of 21 pesos to the dollar, a nearly 13-percent loss since just Tuesday. Eduardo Reyes, standing outside a crowded Mexico City restaurant, says tough times are coming.
EDUARDO REYES: (Speaking Spanish).
KAHN: "If the United States gets a fever, it turns into pneumonia for us. That's just the way it always is," says Reyes. That old adage is ringing true as Mexicans are already seeing prices rise. Those hikes are showing up in a lot of goods Mexicans have come to enjoy in recent years, everything from General Mills cereals, Nabisco cookies, to the American barley used to make their Mexican beer.
Mexican economist Luis de la Calle says the two economies are more intertwined and dependent on each other than ever before, and it will be hard to break that apart.
LUIS DE LA CALLE: Mexico buys from the U.S., co-produces with the U.S. for the world, and we also compete with the U.S. But it's a two-way street.
KAHN: De la Calle, who helped negotiate the free trade deal more than two decades ago, says ripping up NAFTA will also hurt American consumers and American jobs. Every day, nearly a billion and a half dollars' worth of trade crosses the U.S.-Mexico border. According to the Mexico Institute at the Woodrow Wilson Center in Washington, D.C., more than 5 million U.S. jobs are directly dependent on trade with Mexico. But while Trump offended Mexicans with his harsh rhetoric directed at them, there are some here who agree with his depiction that NAFTA was the worst trade deal ever.
ALEJANDRO ALVAREZ: Mexican agriculture has been destroyed.
KAHN: Alejandro Alvarez, an economist at Mexico's National Autonomous University, says small Mexican farmers couldn't compete against U.S. agribusiness.
ALVAREZ: We used to be self-sufficient in corn, and now more than half of the supply that we need comes from the U.S.
KAHN: Alvarez says Mexican agriculture lost nearly a million and a half jobs. He says many of those displaced workers headed north in one of the biggest surges of Mexican migration to the U.S. Two decades later, though, net migration between the two countries is now at virtually zero.
Carlos Petersen of the Eurasia Group, a political analysis firm, says if President-elect Trump keeps his promise to rip up the trade agreement, he could do that with just six months' notice. Duties would once again be placed on Mexican products entering the U.S. Some economists here say Mexico would then impose duties on U.S. imports. But Eurasia's Petersen says Mexico and its much smaller economy wouldn't win that trade war.
CARLOS PETERSEN: The impact for the Mexican economy against the impact to the U.S. economy is overly disproportioned, right? And that's why Mexico doesn't have a lot of tools to really force the hand of Donald Trump into a more beneficial agreement for Mexico.
KAHN: Many economists say the factories now in Mexico wouldn't go back to the U.S. They probably would head to cheaper labor countries like Vietnam or China. In the end, Petersen says soon-to-be President Trump will come under great pressure from U.S. businesses and their Republican congressional allies to move cautiously. Carrie Kahn, NPR News, Mexico City. Transcript provided by NPR, Copyright NPR.