TAG: Mexico
Despite uncertainty surrounding the US-Mexico-Canada Agreement, a challenging global politico-economic environment and subdued domestic GDP growth of 2% in 2018, C-suite executives in the latest OBG Business Barometer: Mexico CEO Survey were largely optimistic, with 65% of respondents stating that their company is likely or very likely to make a significant capital investment within the next 12 months. As the administration of President Andrés Manuel López Obrador moves to achieve a GDP growth rate of 4%, Mexico’s business leaders for the fifth survey in a row have highlighted research and development (32%) as the skill most in need locally.
Since the election of Donald Trump in November 2016, the outlook for Mexico’s economy has been hit by bouts of both uncertainty and positive progress. Just a fortnight after announcing that the US would lift tariffs on Mexican and Canadian steel imports, and publicly willing Congress to pass the US-Mexico-Canada Agreement (USMCA) quickly, President Trump announced on Twitter that he would be imposing progressive tariffs on all Mexican imports to the US, beginning at 5% on June 10 and increasing incrementally to 25% by October 2019. Then, three days before the tariffs were set to go into effect, he called off the plans, citing an agreement to cooperate on immigration.
After a dramatic week in the trade dispute between Mexico and the US, some form of rapprochement seems to have been reached and the threat of trade tariffs by the US has been withdrawn. What is the dispute really about, what does it mean for business and investor sentiment, and what are the domestic political implications for López Obrador and Trump?