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LATAM: Natixis Sees Scope For Strategic Leverage For Mexico Under Trump 2.0

LATAM
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  • Natixis believes that while some countries may face immediate adverse effects from Trump 2.0 policies, others like Mexico may find opportunities for strategic leverage, showcasing the complexity of international trade dynamics in the face of shifting US policies.
  • Mexico’s role in curbing illegal immigration is crucial for Trump, which could secure a more favourable stance from the US. In addition, the US manufacturing sector is highly integrated with Mexico’s, meaning that any drastic policy changes could disrupt supply chains and ultimately harm US industries. Furthermore, Mexico is a major purchaser of US agricultural products, meaning that the US agricultural sector could face challenges if trade relations sour. This interdependence creates a complex dynamic where Mexico's cooperation could be beneficial for both nations.
  • On the other hand, commodity-producing countries such as Brazil, Chile, and Peru are likely to face significant challenges if global commodity prices decline. A decrease in commodity prices, driven by lower global growth, especially in China, and a strengthening US dollar, would lead to a negative terms of trade shock for these nations, resulting in slower economic growth. Colombia could also suffer under Trump’s policies if they lead to lower oil prices, further complicating its outlook.
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  • Natixis believes that while some countries may face immediate adverse effects from Trump 2.0 policies, others like Mexico may find opportunities for strategic leverage, showcasing the complexity of international trade dynamics in the face of shifting US policies.
  • Mexico’s role in curbing illegal immigration is crucial for Trump, which could secure a more favourable stance from the US. In addition, the US manufacturing sector is highly integrated with Mexico’s, meaning that any drastic policy changes could disrupt supply chains and ultimately harm US industries. Furthermore, Mexico is a major purchaser of US agricultural products, meaning that the US agricultural sector could face challenges if trade relations sour. This interdependence creates a complex dynamic where Mexico's cooperation could be beneficial for both nations.
  • On the other hand, commodity-producing countries such as Brazil, Chile, and Peru are likely to face significant challenges if global commodity prices decline. A decrease in commodity prices, driven by lower global growth, especially in China, and a strengthening US dollar, would lead to a negative terms of trade shock for these nations, resulting in slower economic growth. Colombia could also suffer under Trump’s policies if they lead to lower oil prices, further complicating its outlook.