Can Trump fulfill his campaign promises on immigration and trade? Mexico hopes not

The border fence seen from Tecate, Mexico, Nov. 9, 2016.

By Kate Linthicum, Patrick J. McDonnell

Nov. 9, 2016 6:35 PM PT

Mexico City — After months of apprehension, denial and behind-the-scenes crisis planning, Mexican officials are now facing reality: the long-dreaded “Trump Effect.”

Even before Donald Trump was declared winner of the U.S. presidential election, the Mexican currency skidded in international trading, nearing a record of 20 pesos to the dollar. Discussions among many citizens took on a fatalistic, even funereal tone.

“Poor Mexico, and the poor Mexicans in the United States,” said Ariel Zamora, 29, one of several patrons at a bar here early Wednesday who watched in disbelief as the election results rolled in on television screens. “This can’t be happening.”

The banner headline of the daily Reforma proclaimed: “Earthquake!”

The El Economista newspaper concluded: “Nightmare.”

Besides his vow to build a wall along the U.S.-Mexico border and step up deportation of illegal immigrants, Trump has threatened to nix U.S.-Mexico trade deals, impose tariffs on goods imported from Mexico and cut or tax the billions of dollars in cash remittances sent home annually by Mexican immigrants. What remains unclear is which of Trump’s threats are campaign bluster, which he plans to follow through on, and which could prove impossible.

While Trump’s characterization of Mexican immigrants in the United States as “rapists” and criminals angered many Latin Americans, the potential economic ramifications of the Trump agenda are of greatest worry to officials here.

“Mexico has bet heavily on an open and globalized economy,” said Tony Payan, director of the Mexico Center at Rice University’s Baker Institute. “Now that model is upset. The whole economy gets thrown into question. Mexico does not have a strategy for growing on its own.”

It’s not clear that Mexican authorities know how to react, beyond hoping that a Trump administration will be less hostile than some of his campaign rhetoric. Officials have spoken of unspecified “contingency plans.”

“We don’t have the strength to endure a [potential] shock of this magnitude on the fiscal side, and there is little the Central Bank can do to try and mitigate it,” said Pablo Cotler Avalos, director of the economics department at the Universidad Iberoamericana in Mexico City.

In a bid to calm fears, Finance Minister Jose Antonio Meade told journalists Wednesday that Mexico was prepared to “take whatever steps are necessary” to stabilize the economy. But he unveiled no immediate moves, signaling a wait-and-see approach in a period of uncertainty.

Mexico is the United States’ third-leading trading partner, after China and Canada, while the United States is Mexico’s largest trading partner by far. In 2015, according to a recent congressional study, the United States exported $236 billion in merchandise to Mexico, while importing $295 billion in goods from Mexico.

As president, Trump would indeed have considerable powers to carry out some of his economic threats, such as ditching the North American Free Trade Agreement, which he has repeatedly assailed.

But experts cautioned that sudden moves could carry big risks, and that Trump would have to balance his political promises with the economic realities of two countries whose economies are deeply intertwined.

“My broad guess is that Trump will go rather slow on his trade agenda,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington. “He’s smart enough to know that if you create a big trade war, this will reverberate back into the financial markets, and that could send the U.S. economy into a recession.”

Hufbauer said he instead expects Trump to use the threat of tariffs on Mexican imports to pressure companies to move their operations to the United States, or at least to open new factories there.

“He’ll say, ‘I want to see an announcement of a big new plant,’” Hufbauer said.

More than 5 million U.S. workers depend directly on trade with Mexico, noted Christopher Wilson, deputy director of the Mexico Institute at the Wilson Center in Washington. They range from the makers of auto parts for cars built south of the border to the growers of barley used in Mexican beer. So any trade restrictions could cut both ways.

“Jobs would be lost in both countries,” Wilson said, “ and investments would leave the U.S. and Mexico.”

On another threat by Trump, legal hurdles could await his administration if it tries to cut or tax remittances sent to Mexico from Mexican citizens living in the United States. The $25 billion in remittances sent to Mexico last year — most of it from the U.S. — amount to country’s second-largest source of foreign income, after manufactured goods.

“This is one place where Trump may have exceeded his rhetoric,” Payan said. “You cannot simply confiscate people’s salaries.”

On the immigration front, Reince Priebus, chair of the Republican National Committee, told reporters Wednesday that Trump is “not calling for mass deportation.”

That seemed a calculated effort to quell fears in immigrant communities and in U.S. industries dependent on immigrant labor.

But some experts said Trump may feel compelled to act to accelerate expulsions. “I cannot see how he can soften on immigration,” Payan said. “That would be breaking one of his central promises right off the bat, and I don’t think that’s something he’s going to do.”

Trump could act immediately to rescind Obama’s deferred action program, which shielded from deportation more than half a million people who were brought to the United States as children, and roll back other Obama measures that have reduced the number of removals in recent years.

Mexican officials insisted that they are not backing down on one point: Mexico has no intention of picking up the tab for Trump’s signature proposal for a border wall, stretching the length of the 2,000-mile frontier.

“The government of Mexico has been clear and emphatic in saying that paying for a wall is outside of our vision,” Claudia Ruiz Massieu, secretary of foreign affairs, said Wednesday in a television interview. “The vision we have is that [the] United States and Mexico working together are more competitive.”

In a Twitter message Wednesday, Mexican President Enrique Peña Nieto took a conciliatory tone, congratulating Washington and signaling Mexico’s intention to “work together.”

“Mexico and the USA are friends, partners and allies that should keep on collaborating for the competitiveness and progress of North America,” he said.

Later in the day, Peña Nieto said he had spoken with Trump to congratulate him in a “cordial, amicable and respectful conversation.”

The two plan to meet again during Trump’s transition period, he said.

Special correspondent Cecilia Sanchez contributed to this report.