World Economy

Mexico Tells Trump: We Have Many Alternatives

Mexico Tells Trump:  We Have Many Alternatives Mexico Tells Trump:  We Have Many Alternatives

Mexico sent a stark message to US President Donald Trump on Thursday, saying an upcoming visit by Mexican officials to China showed Latin America’s second largest economy had other places to export to if he tore up the NAFTA trade deal.

The North American Free Trade Agreement underpins Mexico’s economy, prompting the government to try and diversify away from the United States, which takes 80% of its exports, CNBC reported.

Trump indicated in an interview with The Economist published on Thursday that he wanted to get the US-Mexico trade deficit down to about zero. He wants to renegotiate NAFTA to get a better deal for US companies and workers, and has threatened to end the agreement if he does not get his way.

“We will use (the China visit) geopolitically as strategic leverage,” said Mexican Economy Minister Ildefonso Guajardo, answering questions on trade at the Mexico Business Forum. “It sends the signal that we have many alternatives.”

Guajardo noted Mexico sends China a fraction of its total exports, and that the two major manufacturing nations tend to compete rather than complement one another on trade.

He also offered a rebuke to China on its trade policy. “We all know that China is not a free trader, that’s the reality,” he said. But he added that Mexico has had success persuading China to ease trade barriers on some goods and expects it to continue to open up as its economy matures.

The trip to China would be in September, Guajardo said, but he did not provide details.

A Mexican diplomat in Beijing told Reuters he was referring to the China International Fair for Investment & Trade summit in Xiamen. “High-level contact is very frequent,” said the diplomat, who was not authorized to comment.

Guajardo said he was also working on a “radical broadening” of preferred tariffs with Brazil and Argentina to lower the cost of importing grains from the South American nations while giving Mexico better access to their manufacturing markets.

That would make the “worst-case scenario” of the US withdrawing from NAFTA less painful for Mexico and strengthen its negotiating hand, Guajardo said.

“If NAFTA disappears, I can export cars (to the United States) paying 2.5% tariffs. If they want to export yellow corn to me, I can raise tariffs to inaccessible levels,” Guajardo said. “But to make that strategy credible, I have to broaden our agreements with Brazil and Argentina.”

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