Donald Trump´s Victory: A New Opportunity for the TX- Mexico Relationship

Por

Rolando Durán Rocha

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Publicado: 26/11/2024 · 1:07 p.m. MX | Actualizado: 26/11/2024 · 1:07 p.m. MX

Donald Trump’s recent victory signals a new phase of strategic opportunities that Mexico should proactively embrace. This outcome reflects the American electorate’s desire for a stable economy and a business-friendly environment. This economic boost benefits the United States and opens doors for Mexico, especially within the United States-Mexico-Canada Agreement (USMCA) framework. Trump’s trade war with China has been a central strategy, and his administration is expected to continue policies aimed at redefining global trade. In this context, Mexico, as a critical part of North America’s supply chain, can establish itself as an essential partner for the U.S. economy.

Texas has been a crucial player in this relationship. Under Governor Greg Abbott’s leadership, the state has fostered a business-friendly environment that has attracted influential figures like Elon Musk. Based in Austin, Musk has driven pro-business policies and was recently appointed by Trump to lead the Department of Government Efficiency. In this role, Musk will advocate for reducing bureaucracy, which, combined with his influence in Texas and his investments in Mexico, can streamline trade and production connections between the two countries.

Beyond Musk, other Texas leaders, such as prominent lawyer John B. Scott, play essential roles. Scott, with a strong background in state politics, has close ties to Governor Abbott and the Trump administration. His experience as Texas Secretary of State and his previous role representing Trump in legal matters following the 2020 election position him as a crucial link between Texas interests and Trump’s federal policies. Scott’s influence supports strategic alignment between Texas leadership and Trump’s initiatives, particularly on legal and commercial issues directly affecting U.S.-Mexico relations. These figures enhance Texas’s business environment and foster a synergy that benefits both countries under the USMCA.

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Tesla’s expansion in Nuevo Leon strengthens the production corridor between Texas and Mexico, with the plant expected to supply the U.S. market and contribute to electric mobility projects, particularly Texas’s plans to expand its network of electric vehicle charging stations. Supported by the Texas Department of Transportation, this plant’s proximity and collaboration with Mexican border states enable Tesla to establish an efficient production and supply chain that quickly responds to electric vehicle demand. This development positions Mexico as a critical partner in Texas’s electric mobility strategy, facilitating a cross-border logistics network that benefits both countries.

The energy sector represents a vital area of collaboration between Mexico and the U.S. Projects like the Midland-to-Mexico gas pipeline, which involves companies such as Woodside, Sempra Infrastructure, TC Energy, and Mexico Pacific Limited, highlight the significance of shared energy infrastructure. Mexico Pacific, under Sarah Bairstow’s leadership, is also constructing a gas liquefaction plant in Sonora, bolstering Mexico’s natural gas export capabilities and establishing it as a key player in the global energy market. Bairstow’s recent attendance at a business summit held at the National Palace with President Claudia Sheinbaum emphasized the Mexican government’s dedication to promoting foreign direct investment.

Public-private partnerships between the Federal Electricity Commission (CFE) and Texas energy companies are a cornerstone of energy collaboration between Mexico and the U.S., strengthening supply infrastructure and regional energy security. Through its subsidiary CFEnergía, Mexico has established strategic partnerships with TC Energy, New Fortress Energy, and other U.S. firms, facilitating the development of gas pipelines and liquefaction projects that support the flow of natural gas from Texas to various regions of Mexico. These collaborations boost Mexico’s ability to supply its domestic market and establish cross-border infrastructure that maintains energy interdependence between both countries. Under the Trump administration, and with Texas as a strategic ally, these public-private partnerships ensure a stable and efficient energy flow, strengthening trade ties and reinforcing Mexico’s position as a critical link in North America’s energy supply chain.

Wesley Edens, founder and CEO of New Fortress Energy, is a significant figure in U.S.-Mexico energy relations. With a vision centered on expanding access to natural gas, Edens has driven strategic projects in Mexico, such as the floating gas liquefaction plant in Altamira, Tamaulipas, in partnership with CFE. Edens’ leadership at New Fortress Energy has been instrumental in strengthening energy interdependence between both countries, positioning his company as a critical bridge for North America’s energy security and supply. Edens exemplifies the innovative business leader who, through strategic partnerships, promotes essential infrastructure development and strengthens binational energy collaboration.

These binational partnerships ensure the region’s energy supply and underscore the interdependence between the two countries. The Trump administration’s support for these binational energy infrastructure projects promotes shared security and provides a steady flow of energy resources that are essential for North America’s economic and energy stability.

The potential replacement of moderate figures in Trump’s administration with more radical MAGA supporters, such as J.D. Vance, could complicate cooperation with Mexican leaders, especially if significant ideological differences arise.

Texas is not just an economic powerhouse; its leaders considerably influence Trump’s policy direction. Figures such as Texas Attorney General Ken Paxton and Agriculture Commissioner Sid Miller are possible candidates for key positions in Trump’s cabinet, supporting pro-business policies and facilitating trade with Mexico. Advisors like Kevin Roberts, president of the Heritage Foundation, and Brooke Rollins, former head of Trump’s Office of Innovation, are also poised to shape trade and energy policies, bolstering bilateral cooperation and aligning policies for mutual benefit.

For Mexico, understanding this structure and leveraging the influence of Texas and its key figures in the U.S. government are essential for strengthening its position in the bilateral relationship. Texas is already the economic engine of the USMCA, and Mexico must continue to collaborate with these Texan leaders and businesses to secure a strategy for shared growth.

In 2023, Texas became a crucial trading partner for Mexico, with trade reaching nearly $272 billion. This amount highlights Texas’s significant position among U.S. states in this economic partnership. Major exports include transportation equipment, machinery, and electronics, which strengthen cross-border supply chains and foster collaboration in key industries like automotive and advanced manufacturing. The state’s proximity to Mexico facilitates nearshoring, allowing U.S. companies to relocate production from Asia to Mexico, ultimately lowering costs and shipping times, thereby enhancing competitiveness and strengthening regional economic ties.

Trump has voiced his frustration with trade deficits, calling tariffs “the most beautiful word.” Given that the U.S. goods trade deficit with Mexico increased by $22 billion, reaching $152 billion in 2023, there is concern about the potential imposition of new tariffs that could adversely affect Mexican exports.

At this crucial moment, Mexico needs to act proactively to strengthen its position as the United States’ strategic partner. It must maintain a vision of shared prosperity that promotes economic stability on both sides of the border and allows North America to lead in sectors such as energy and technology.

As the primary beneficiary of trade under the USMCA, Texas will also advocate for this relationship to generate the remarkable growth seen since 2020. If it’s good for business, it’s good for Texas; if it’s good for Texas, it’s undoubtedly good for Mexico.

Rolando Durán Rocha