### Potential Effects of Trump Returning to the White House on Mexico: Analyst’s Insight
Should Republican candidate Donald Trump win the upcoming U.S. presidential election in November, the impact on Mexico’s economy might not be as dire as some anticipate, according to Janneth Quiroz Mora, the director of currency and stock market analysis at Grupo Monex. Despite Trump’s often volatile rhetoric, several factors could play in Mexico’s favor, particularly regarding its economic relations with the United States.
Quiroz Mora highlighted that the ongoing trade war between the U.S. and China positions Mexico advantageously as one of the U.S.’ primary economic partners. While Trump’s comments could inject some uncertainty, particularly regarding the T-MEC (USMCA) renegotiations set to begin in 2025, the core economic relationship between the two countries is robust.
Trump has recently made statements threatening to impose a 100% tariff on cars imported from Mexico and a 200% tariff on Deere if it relocates its production line to Mexico. Despite these threats, Quiroz Mora predicts that Mexico’s overall economic growth might slow due to a challenging inflation landscape. Growth rates are expected to dip to 1.6% annually in 2024 and 1% in 2025.
Several downside risks could further affect Mexico’s economic outlook. These include slower-than-expected growth in the U.S. economy, increased uncertainty from electoral processes and geopolitical conflicts, financial market volatility, and adverse weather events like droughts and cyclones.
Inflation remains a significant concern, with general prices rising and staying above the Bank of Mexico’s target. Various factors, including potential peso depreciation and higher imported goods costs, could drive inflation. Additionally, disruptions in global supply chains and escalating geopolitical tensions might exacerbate the situation.
In terms of monetary policy, the Bank of Mexico is expected to cut the benchmark interest rate to 10% by the end of 2024, with a further decrease to 8% anticipated the following year, marking a normalization of monetary policy.
Certain sectors in Mexico could benefit from the global realignment of production activities, notably the automotive, aerospace, agricultural, agroindustrial, medical equipment, digital economy, logistics, pharmaceutical, and transportation sectors. However, the benefits from Foreign Direct Investment (FDI) will largely depend on improvements in infrastructure, education, regulatory quality, logistics, and security, alongside the current political uncertainty.
In her address to the Public Accountants’ Association in Baja California during a visit to Tijuana, Quiroz Mora underlined the Mexican peso’s significant depreciation in 2024 amongst emerging market currencies, attributed to uncertainty around proposed constitutional reforms.
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### Secondary Article: Broader Economic Implications of a Potential Trump Presidency
As the possibility of Donald Trump returning to the White House gains traction, analysts and economists worldwide are assessing the potential ramifications on global economies, particularly those closely tied to the United States.
**Concerns for Global Trade Dynamics:**
Trump’s previous tenure saw significant shifts in trade policies, including renegotiating trade deals and imposing tariffs on several countries. Experts fear a return to such policies could reignite trade tensions, particularly with China, potentially disrupting global supply chains once again.
**Impact on the T-MEC Agreement:**
Analysts have raised concerns that Trump’s aggressive stance on renegotiating trade agreements could affect the T-MEC. Although the agreement has provided a stable framework for trade between the U.S., Mexico, and Canada, any renegotiation efforts or additional tariffs could introduce volatility.
**Investor Sentiment and Market Volatility:**
There is widespread apprehension among investors regarding the potential market volatility a Trump presidency could reintroduce. Stock markets, which often react to uncertain policy environments, might experience increased fluctuations, affecting global economic stability.
**Inflation and Monetary Policies:**
Globally, central banks might need to recalibrate their monetary policies in response to changes in U.S. economic strategy under Trump. The potential for higher tariffs and renewed trade wars could lead to inflationary pressures, necessitating tighter monetary policy measures.
As the world waits to see how the U.S. presidential race unfolds, the economic strategies of countries closely allied to the U.S. remain in a state of preparedness, ready to adapt to potential policy shifts that could redefine global trade and economic landscapes.