What’s Next for the Mexican Economy with Trump’s Presidency?

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Angélica Simón Ugalde

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Publicado: 6/11/2024 · 11:47 a.m. MX | Actualizado: 6/11/2024 · 11:47 a.m. MX

Following the U.S. presidential election, which has given a virtual victory to Republican candidate Donald Trump, the Mexican peso reached a new high of 20.6998 per dollar in international markets. By the end of the trading session at Banco de México, the wholesale exchange rate settled at 20.0788 per dollar. This marks a 3.09% depreciation compared to the official close on Tuesday.

Economic outlook with Trump

According to Donald Trump’s statements during his presidential campaign, Mexico may face restrictive policies, additional tariffs, and a generally protectionist economic approach.

“Our main trading partner is the world’s largest economy, so its trade policy decisions significantly affect the region,” warns the Mexican think tank México ¿Cómo Vamos? In their analysis, titled What Challenges Does Mexico Face with the New U.S. Administration?, they highlight that 84% of Mexican exports of non-oil goods go to the United States, and 80% of light vehicle exports from Mexico are destined for the U.S. and Canada.

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Economists within this organization argue that the United States-Mexico-Canada Agreement (USMCA) is North America’s most significant comparative advantage. Ahead of the 2026 review, they believe it is essential to deepen supply chain integration to make it more resilient and increase the regional value of production.

“This can only be achieved through a coordinated effort to adopt measures that serve this goal; otherwise, it will be more difficult to prevent parties from acting in their own interests, potentially compromising the rest of the region,” they note. The three North American countries must maintain a focused agenda toward the first review of the USMCA, as challenges remain that cross borders.

“Northern America has a historical opportunity to harness the region’s potential by leveraging its complementary trade and human capital,” experts suggest, emphasizing the importance of setting shared goals for the future.

Gabriela Siller Pagaza, Director of Economic and Financial Analysis at Grupo Financiero Base, remarked that although the peso appreciates due to the U.S. election, it is unlikely to reach historic highs despite the threats posed by the Republican candidate.

“While the peso is the most depreciated currency among the dollar’s major pairs, this is a very different story from 2016. Back then, we didn’t know Trump; now, we know he’s a tough negotiator, but he doesn’t follow through on all his threats,” said Siller Pagaza.

With information from Verónica Reynold.

Angélica Simón Ugalde