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Mexico weighs response to Trump’s forceful stance

Mark Stevenson
Associated Press

Mexico City — Mexicans are beginning to debate how to fight back against U.S. President Donald Trump’s aggressive stance on trade and immigration.

Prominent political figures have suggested the country expel U.S. law enforcement agents, stop detaining Central American migrants or no longer inspect northbound trucks for drug shipments. Some activist groups on Friday were calling for a boycott of American brands.

Former President Felipe Calderon said Thursday that “we have to design a policy of retaliation” for Trump’s proposed plans, which include making Mexico pay for the border wall he wants to build.

“We have to put U.S. security issues under review … including the presence of (U.S.) agents” on Mexican soil, Calderon told local news media.

The comments came after current President Enrique Pena Nieto scrapped a planned Tuesday meeting with Trump after the American president tweeted that it would be better to cancel if Mexico wasn’t willing to pay for his proposed wall.

Ruben Aguilar, a political consultant who was spokesman for former President Vicente Fox, noted Friday that Mexico has been stopping Central American migrants before they reach the U.S. border “as part of the logic between two friendly countries.”

He suggested that Mexico could say, “Okay, I’m not going to stop Central Americans anymore,” and added, “Now if our two countries aren’t friends anymore, that is a card we could play to increase the pressure.”

Meanwhile, if Trump makes good on threats to gut NAFTA and impose stiff tariffs on Mexican goods, economists say he risks a trade war that could lead to the very thing he is hoping to avoid — a huge surge in Mexican migration to the United States.

The result would be catastrophe for the Mexican economy. Recession. A dramatic weakening of the peso, even below the historic lows it has already set amid Trump’s bellicose rhetoric. Soaring inflation, interest rates and unemployment.

“Mexico is smaller than the U.S. and can be harmed by conflict more than the U.S. would be,” said Adam Posen, president of the Peterson Institute for International Economics, a Washington think tank that supports free trade.

A trade war with Mexico “drives down the peso and drives down opportunities for Mexicans to make a living in honest manufacturing jobs,” he added. “There will be more desperate Mexicans crossing the border.”

And the U.S. would by no means be immune from the fallout.

Mexico is the United States’ third-largest trading partner for goods, and the two countries did some $583.6 billion in total cross-border commerce in 2015, according to the Office of the United States Trade Representative. That included a U.S. goods and services trade deficit of $49.2 billion. America buys about 80 percent of Mexico’s exports, with automobiles, electrical machinery and fuels topping a long list that also includes agricultural goods such as fruit, vegetables, wine and beer.

The Trump administration’s proposal this week for a 20 percent tax on imports from Mexico to pay for the promised border wall was quickly walked back by officials as just one of multiple “options.”

It could also face stiff opposition in Congress including from Republicans who favor free trade. Sens. John McCain and Jeff Flake of the border state of Arizona have publicly come out in support of NAFTA. McCain noted that it has increased his state’s exports to Mexico and Canada by $5.7 billion since its enactment in 1994.

The worst case scenario of a trade war is frightening to contemplate, economists say. If the U.S. were to slap a tax on Mexican imports, it would violate the terms of NAFTA and nullify the pact, said Alfredo Coutino, Latin America director at Moody’s Analytics.