Why Trump Actually Needs Mexico

The re-election of Donald Trump has resulted in a flood of doom-laden coverage about Mexico. There are many reasons to worry. Trump has always had a hard-ball approach to Mexico. His extreme cabinet picks and most radical policy proposals—most recently his threat to increase tariffs by 25% until the border is secured—could well hit Mexico like a ton of bricks.

It would not be wise to assume this is mere bluster. But it is equally wrong to assume it’s all bad news for one of Trump’s favorite foreign punching bags. The doomsayers ignore Mexico’s strengths at the negotiating table as much as they underestimate the President-elect’s interest in making his country’s most important bilateral relationship work.

A proper look at the main U.S.-Mexico issues—migration, trade, and security—reveal much to fear, but also much to hearten and even excite observers.

Even for a President with such a zero-sum approach to geopolitics, listen carefully to Trump today and it is increasingly clear that he understands there is no American greatness without a successful and stable Mexico.

Trump on trade with Mexico

Of course, the U.S. could move to curtail Mexican exports by making all its own goods and providing its own services. But that would swiftly lead to election-losing runaway inflation. That’s because Mexican manufacturing prevents the cheapest car in the U.S. from being unaffordable or raspberries from being $50 dollars a pound in the winter.

Read More: Why Trump’s Tariffs Could Raise Grocery Prices

Doubtless, a trade war would hurt Mexico more, given that over 80% of the country’s exports go to the U.S. But even though the 16% of U.S. exports that go to Mexico look comparatively modest, the country is still the second largest buyer of American wares.

Some U.S. states rely more on the Mexican market than others. Texas, the country’s top exporter, sold $144 billion worth of goods to Mexico in 2023—the highest value of exports from any state to any country. But all states would quickly come to realize Mexico’s role as a consumer of U.S. goods if Mexican retaliatory tariffs came into play.

Despite recent heightened anti-Mexico rhetoric, there is much crucial cooperation on trade that a tariff war would undermine.

Both the U.S. and Canada are worried that Mexico acts as a wage depressor and a “back door” to cheap Chinese imports. The Mexican government is also concerned and has been taking action. It has tripled the minimum wage in the past six years as part of ambitious social welfare reforms, and has taken action against cheap Chinese imports—albeit not enough for some of its fellow North American trading partners.

Just look at the steel industry. Mexico imposed tariffs on the subsidized stuff coming from China, and it is looking north to strengthen its position. One of Mexico’s largest steelworks is also an important investor in the U.S., and has increased production in the country.

Mexico understands no North American country can go it alone, and so do Republicans in Congress. The bipartisan Americas Act recognizes that for the U.S. to stall the rise of China in the Western Hemisphere, keep prices stable, and bolster its own manufacturing, it needs to work with Mexico.

Trump understands this. His protectionist pick for trade tsar, Robert Lighthizer, negotiated NAFTA’s replacement, the U.S.-Mexico-Canada Agreement (USMCA), in the first place. And though Trump’s desire to “invoke the six-year renegotiation provision of the USMCA” sounds ominous, it is a process that was already expected to take place. Negotiations are sure to be tough, but Trump says he wants to make USMCA “a much better deal;” a far cry from the 2016 fears that the U.S. would exit the North American trading bloc altogether.

That Mexican industry thrived—despite its own internal turmoil—after the USMCA and the U.S.-China trade war shows that, ironically, Trumpian economic nationalism only really works with Mexico in the equation.

A different war on drugs

Of course, the U.S. could declare war on Mexican drug cartels unilaterally. On paper, Trump already has.

What has gone unremarked is that his tone toward Mexico at times is far more conciliatory today. While campaigning, he highlighted the suffering organized crime has caused in Mexico, promising an “unprecedented partnership with neighboring governments in our region.”

His demands, though often put forward with his usual aggression, neatly fall into the newly elected Mexican President Claudia Sheinbaum’s own security priorities—namely the exclusion of cartels from the global financial system. This could be a crucial area for bilateral cooperation.

Read More: The Tragedy of Mexico’s Election

Yet Trump has also worryingly threatened to bomb criminals on Mexican soil. Beyond it being unlikely to work (killing druglords has only increased violence), in sovereignty-obsessed Mexico, this would be a disaster. This poses the biggest risk to friendly U.S.-Mexico relations.

There is a view in Mexico that Trump says what the U.S. quietly does anyway under any administration. Under the Democrats, U.S.-Mexico relations hit historic lows, with the U.S. Ambassador now openly attacking the Mexican government for its lack of cooperation on fighting organized crime. Sheinbaum has rebutted by saying that the U.S. consistently violates Mexican sovereignty—the most recent case being the alleged U.S. involvement in a covert operation to kidnap a cartel leader on Mexican soil for him to stand trial stateside.

Mexico is the wall

And finally, of course, the U.S. could force Mexico to pay up for the cost of blocking migrants heading north. Arguably, Trump already succeeded in this during his first term.

Today, under threat of crippling tariffs, Trump has said Mexico should take charge of stemming migration to the U.S. This is because the President-elect understands that Mexico has been relatively effective in doing this recently.

First under President Andrés Manuel López Obrador and now under Sheinbaum, a new National Guard has been deployed almost exclusively to stop migrants. The upshot is that Mexico, at least as seen from the U.S., is able to turn the migrant tap on and off at will. Whether this is true or whether it can do it without violence—the National Guard is increasingly accused of killing migrants—remains to be seen. For now, Mexico is reported to be busing 10,000 migrants every month from the U.S. border to the Guatemala one.

The migrant crackdown has flipped Mexico’s negotiating power on this issue, and Sheinbaum is working to strengthen her hand. Cuts were the defining feature in her administration’s recent budget, with the National Immigration Institute a glaring exception. This came alongside a new “Tapachula development pole” in southern Mexico, which is virtually a migrant trap. However, instead of sending them back home, the development pole will offer migrants jobs, both stopping them on their way to the U.S. but also solving labor shortage issues in certain regions of Mexico.

The Mexican government has often been indifferent to migrants traveling through the country. Trump arguably forced it to face the issue, and produced some mutually beneficial plans (alongside grave human rights concerns). The same could be said of the wage-hikes, which were long overdue, and more recently action against fentanyl, which is increasingly becoming an issue in Mexico too. Given the drug’s precursors mainly come from China, this has become another link between trade and security for the region.

Ultimately, of course, the U.S. would survive without Mexico. It would just be a far poorer, weaker, and less secure country for it. There is an understanding that both sides know this, so even if Mexico is the perennial underdog in this bilateral relation, it can still look forward to sitting across the negotiating table with some strong aces up its sleeve—it may even feel a degree of hope for better times in an uncertain future.