U.S.-Mexican Relations Could Get Worse

The U.S.-Mexican relationship has seen better days. The assumed alliance and cooperation between our two countries have been strained more in the last year since President Trump took office than at any other point in the last quarter of a century. And if the current frontrunner Andrés Manuel López Obrador wins the Mexican presidency in July, the current strained relationship could get worse.

Running on a leftist, nationalist platform of the Morena political party, López Obrador (popularly known as “AMLO”) is as critical of President Trump as he is of the current Mexican President Enrique Peña Nieto. He has said that “Mexico and its people will not be the piñata of any foreign government” and promised to stand up to Trump. The intensifying anti-Trump rhetoric could account for a recent consolidation of López Obrador’s lead over Ricardo Anaya of the National Action Party (PAN) and Jose Antonio Meade of the Institutional Revolutionary Party (PRI). The possibility of Russian interference in the Mexican election, as former U.S. officials have warned, could also account for his accumulating lead; a recent poll by the Mexico-based Parametria has him capturing 38 percent of the vote.

López Obrador’s election would have serious implications for the economic growth trajectory for Mexico and, in turn, the bilateral relationship with the United States. If successful, López Obrador’s win would likely spook financial markets in the short-term, resulting in a period of capital flight from Mexico, a cooling of foreign investment, and a slump in economic growth in Mexico, which has been averaging approximately 2.4 percent a year. Indeed, we are starting to see these results already, given that López Obrador has been leading in the polls for several months and negotiations over the North America Free Trade Agreement (NAFTA) have hung in the balance for more than a year. And this is just the beginning: If López Obrador wins, Mexicans should prepare themselves for a problematic economic relationship with the United States going forward and an even more difficult relationship with Trump.

López Obrador’s economic views may have tempered since he first ran for president in 2006, and there are some indications he would seek to maintain macroeconomic stability in Mexico; however, it is likely he would take a more interventionist role in the Mexican economy. This could mean the return of state-owned entities, government subsidies, and a roll back of market-friendly reforms, namely in the important energy sector. López Obrador could also try to dismantle the energy reforms enacted under Peña Nieto in 2014 by reviewing oil contracts, calling a referendum on the role of private investment in the sector, and extending the reach of state-owned Pemex.

Regarding NAFTA, Mexico has much more to lose than the United States or Canada if negotiations fail; after all, 80 percent of its exports go to the United States. But if López Obrador is elected to stand up to Trump, he could be the one to pull out of a deal deemed unfair to Mexico. With other free trade agreements in Latin America, Asia, and Europe, he could shift trade elsewhere. At this point, this is the less likely outcome, but still a possibility. With luck, the current negotiators will make progress on key sticking points, including rules of origin in the auto industry, and announce a preliminary deal on NAFTA at the Summit of Americas in Peru April 13–14 — or at least before Mexico’s election.

A roll back of economic reforms in Mexico or the demise of NAFTA could spell doom for the Mexican economy and the U.S.-Mexican relationship. The interconnectedness of the U.S. and Mexican economies cannot be overstated — U.S. exports account for $236 billion a year — and the cause and effect relationship between jobs and immigration must be highlighted. Unorthodox economic policies or a failed NAFTA deal would have a dramatic impact on Mexican jobs and thus increase the likelihood for a surge in illegal migration. It would also have a negative impact on security. Market friendly economic policies have been the foundation for a broader bilateral agenda that includes security cooperation on immigration and border control, intelligence-sharing, and counternarcotics.

Meanwhile, Trump’s negative rhetoric about Mexico is playing into López Obrador’s hands and fueling his support in Mexico. Every time Trump insists Mexico will pay for the border wall, vilifies immigrants and criticizes Mexico’s handling of those from Central America, or threatens tariffs, he helps to solidify López Obrador’s position as the frontrunner and the likely next president of Mexico. The most recent announcement that Trump will deploy National Guard troops to the U.S.-Mexico border is another example. While Trump is feeding his base, he is also feeding López Obrador’s.

A better way forward would be for our political leaders on both sides of the border to cool the rhetoric. They may gain domestic political points in the short-term, but the negative attacks make it difficult to build the good will necessary to negotiate a modernized NAFTA deal or to improve our immigration processes and border security. Instead of building a wall or deploying troops, we should put resources toward enhanced technologies for border protection, training and equipment for additional border patrol guards, and better intelligence capabilities that can thwart not just the illegal flow of migrants, but also the illegal flow of drugs, weapons, and money.

The best case scenario moving forward would be a tough resolve to preserve and protect U.S.-Mexican relations and negotiate a way forward on trade, immigration, and border security that does not lay us bare to a major economic and security crisis in Mexico. A new and improved NAFTA, a more streamlined and fair immigration system, and a more secure and technologically-advanced border would actually be a win-win for both Trump and López Obrador — or whoever becomes Mexico’s next president. But more importantly, it would be a win-win for the American and Mexican people.

Amanda Mattingly is Senior Director at The Arkin Group and a Security Fellow with Truman National Security Project. She previously worked in the State Department. Views expressed are her own.