For the year 2016, Arizona’s exports to Mexico totaled $8.3 billion, down from the $9.1 billion recorded in 2015. Arizona ranked fifth among the states exporting to Mexico in 2016, behind Texas, California, Michigan, and Illinois. The American economy is forecast to grow 2.3% in 2017. Economists have downgraded Mexico’s projected economic growth rate from approximately 2.5% to 1.5% mainly due to the uncertainty generated by the Trump administration’s anticipated policies. Since Mexico’s economic wellness depends in large part on its relations with the U.S., the country’s economic future looks a bit cloudy at this time.
President Trump has called for a 35% tariff and other constraints to be placed on imports from Mexico. His plan for the construction of a wall along the border is expected to cost somewhere between $12 and $25 billion and Mexico is refusing to pay for it. Trump has also denounced the North American Free Trade Agreement (NAFTA), calling it the worst trade deal ever approved. The unraveling of NAFTA would damage Mexico’s economy because it currently ships over 80% of its exports to the United States. The political uncertainty has also made investors in Mexico turn to the cautious side. Due to the unstable economic environment, a Mexican recession cannot be ruled out.
The remittances Mexicans working in the U.S. send home average about $2 billion per month, a tidy sum that accounts for approximately 3% of the Mexican economy. The American and Mexican economies are linked to a high degree with an estimated six million American jobs reliant on trade with Mexico. If the trade relationship is shattered there would be an impact on American employment and foreign sales because Mexico obtains 49% of its imports from U.S. sources. On the positive side, many analysts doubt that Trump will push his stated policies to the limit because the U.S. has too much to lose in a trade war with Mexico. Turning the long border region into a zone of hostility serves no national purpose.
There are about 11 million undocumented immigrants residing in the United States, about half are from Mexico, the bulk of the remainder from Central America and Asia. Research findings show that about two-thirds of the adults have been in the U.S. for around 10 years. Two-fifths of the undocumented population have children, many of whom are American citizens. The federal immigration courts are jammed with 542,000 pending cases and have only 300 judges to hear the case load. There has been a large increase over time, ten years ago the number of cases was 175,000. The federal government spends approximately $19 billion per year on immigration enforcement, more than is spent on the FBI, Drug Enforcement and the Secret Service combined. The proposal to add 15,000 new agents will add about $910 million to the current $3.8 billion immigration enforcement staffing budget.
The Obama administration deported more unauthorized immigrants than any previous administration. In the nation’s interior, its primary enforcement focus was on removing terrorism suspects and criminals. As a result, 67% of the deportees in 2011 had criminal records. By 2016, the deportee share with criminal records had increased to 92%. About two million people were considered to be eligible for removal under the Obama administration’s guidelines. Under President Trump’s proposed policies, the number eligible to be deported could run as high as 8 million to 11 million.
Mexico has an election scheduled for 2018 and Andres Manuel Lopez Obrador is making his third try at getting himself elected Mexico’s president. He is best described as a charismatic populist who rages against privilege, corruption and the political establishment. He is not considered to be an institution builder and his constricted economic views may not help grow the Mexican economy. Obrador considers the privatization of government commercial enterprises to be a synonym for robbery. Because Mexico is now confronted with an American president who says he wants to terminate NAFTA, deport millions of Mexicans and build a border wall, Obrador is portraying himself as the only candidate capable of standing up to Trump. The fiery candidate has an advantage, if the Mexican economy falters during the coming months he knows that Mexico’s voters will blame President Trump.
The increase in illegal border crossers from Honduras, Guatemala and El Salvador is an indication that violence and poverty will continue to drive people to cross the border as they seek a better and safer life. The President has apparently forgotten or ignored the fact that economic assistance can play a vital role in American foreign policy. Before he puts the finishing touches on the policies affecting Mexico and Central America, it might be time for his White House staff to delve into the old files and read the Marshall Plan, paying close attention to its outcome.