Trump’s Brinkmanship Is Changing Mexico

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The highlights this week: Mexico thwarts U.S. tariffs for now, U.S. Secretary of State Marco Rubio takes his first tour of the region, and Buenos Aires gets creative to promote its taxi industry.

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Although last-minute deals this week delayed U.S. President Donald Trump’s plans to impose 25 percent tariffs on Mexico and Canada for 30 days, his initial move shook assumptions in both countries about the United States.

Trump’s tariff proposal flies in the face of the U.S.-Mexico-Canada (USMCA) free trade pact, which he negotiated to replace a previous deal during his first term. The plan is also a direct contradiction of U.S. Secretary of State Marco Rubio’s claim that the Trump administration seeks an “Americas First”—note the plural—policy.

Rubio took his first international trip this week, visiting a few countries in Central America and the Caribbean. In his own telling, the Americas First approach includes increasing trade ties and “relocating our critical supply chains to the Western Hemisphere,” a process sometimes referred to as nearshoring. But 25 percent tariffs would rattle investors considering Mexico.

“It is likely that tariffs will be a weapon that Trump will wield as many times as he likes during the next four years” as he seeks concessions from Mexico, former Mexican Ambassador to the United States Arturo Sarukhán wrote in Letras Libres on Monday.

Some observers credited Trump’s backpedal to Mexican President Claudia Sheinbaum’s cool and communicative negotiating style. Impressed advisors to Brazilian President Luiz Inácio Lula da Silva have since last month considered Sheinbaum a model for how to deal with Trump, Bloomberg reported.

Sheinbaum held back from immediate public announcements of retaliation when Trump ordered the tariffs on Saturday. Then, in a phone call on Monday morning, she calmly reemphasized to Trump the steps that Mexico was taking to address his concerns about border security, including sending thousands of additional security forces there.

Trump said he would delay the Mexico tariffs soon after the call, hours before doing the same for Canada. Canadian Prime Minister Justin Trudeau similarly pledged border reinforcements on Monday.

It’s still not clear if Trump was bluffing. “I find it hard to believe that a treaty negotiated by Donald Trump is going to be set aside, because it is a very powerful tool,” said Ricardo Aranda, a former member of Mexico’s USMCA negotiating team. Some observers have argued that Trump was serious about the tariff threats—but got cold feet over the prospect of a drop in the U.S. stock market.

Regardless of Trump’s thinking, his continued tariff threat has prompted some in the Mexican business and political communities to call for diversifying the country’s trade relationships. Mexico and the European Union’s agreement last month to update their trade deal is a step in this direction.

Though some 80 percent of Mexico’s exports currently go to the United States, recent bilateral tensions underscore “the vulnerability of depending excessively on a single economic partner,” National Autonomous University of Mexico political scientist Talya Iscan wrote in Milenio.

Aranda cautioned that trade diversification is easier said than done. “Mexico already has a network of free trade agreements,” but non-tariff barriers to trade sometimes remain, he said. “A very clear example is the European Union and its agriculture safety measures.”

Closer to home, Mexican negotiators are strapping in for a sure-to-be challenging review of the USMCA pact that is due by next year. It’s still too early to know what Trump might seek in that review, Aranda said, especially because his nominee for U.S. trade representative is not yet confirmed.

In the meantime, one lesson from the week is clear, Aranda added: “You’re not going to end up solving the problem by yelling.”

Friday, Feb. 7: Turks and Caicos Islands holds a general election.

Sunday, Feb. 9: Ecuador holds presidential and legislative elections.

Wednesday, Feb. 19, to Friday, Feb. 21: Barbados hosts a Caribbean Community leaders’ summit.

What We’re Following

U.N. rumors—and reprimands. Rebeca Grynspan, the head of the United Nations Conference on Trade and Development and former vice president of Costa Rica, did not deny in an El País interview this week that she was considering a run for U.N. secretary-general. Incumbent Secretary-General António Guterres’s term ends in 2026, and preparations for selecting his successor will begin this year.

Grynspan’s potential ambitions put her among a group of women from Latin America and the Caribbean who have been informally floated for the role. They include Barbados Prime Minister Mia Mottley and former Chilean President Michelle Bachelet.

Even as some leaders in the region reinforce their faith in the U.N. system, others are spurning it. Argentine President Javier Milei announced this week that he would pull the country out of the World Health Organization, citing differences over pandemic policy that mirror the reasoning of his close ally Trump. Health experts warned that the withdrawal could hurt Argentina’s ability to monitor disease outbreaks.

Remembering a late leader. Former Salvadoran President Mauricio Funes died late last month. He served as president from 2009 to 2014 and dominated El Salvador’s political scene during that time. While the country today is known for its right-wing politics, Bitcoin adoption, and gang crackdown, Funes was a left-wing leader.

Funes began his career in journalism and was connected to the country’s social movements. He was the first left-wing president in El Salvador following its civil war that ended in 1992; El Faro journalists Sergio Arauz and Óscar Martínez called the “transition between right and left” marked by Funes’s election “the most important milestone in Salvadoran postwar politics.”

But once Funes was in power, corruption investigations found that he oversaw the “looting of public coffers to bankroll an opulent lifestyle,” Arauz and Martínez wrote. Funes eventually fled to Nicaragua, where President Daniel Ortega’s administration granted him asylum and citizenship.

Art of the taxi. The Buenos Aires city government has partnered with a group of artists to paint designs on the side of the city’s iconic taxis. Officially registered taxis are colored black and yellow due to a law dating to the 1960s. In recent years, they have faced increased competition from ride-sharing apps like Uber and Chinese company DiDi.

The art is meant to inspire riders to take registered cabs. Taxi drivers get to choose the art for their vehicles, and the partnership so far has yielded images of soccer icon Diego Maradona as well as homages to Argentina’s role in the Falklands War against the United Kingdom.

DiDi, for its part, recently named its own strategy for staying ahead of the competition in Latin America: ensuring electric vehicles are quickly incorporated into its fleet.

Roughly what percent of Mexican exports went to the United States in 1993, the year before NAFTA, the free trade deal that preceded USMCA, took effect?

70 percent

73 percent

77 percent

83 percent

The portion of Mexico’s exports that went to the United States was already around its current level before NAFTA’s approval. After the deal, the volume of Mexico’s overall international trade rose dramatically—by more than 680 percent between 1993 and 2018, according to government data.

Rubio’s trip this week made clear an initial goal of U.S. policy toward Latin America: seeking assurances from countries in the region that they will accept deportees from the United States.

That focus was underscored by a jaunt that preceded Rubio’s. Last Friday, Venezuelan President Nicolás Maduro became the first regional leader to be paid a public visit by a Trump envoy. U.S. attaché Richard Grenell met with Maduro in Caracas before returning home with six Americans who were detained in the country.

Then, on Saturday, Trump said that Venezuela had agreed to take back deportees from the United States and provide the transportation to do so. Venezuela’s government did not immediately publish details of the deal. Grenell’s public visit was a dramatic turn of events; the previous Trump administration sought to overthrow the authoritarian Maduro.

The Trump administration’s machinations with Venezuela suggest that the White House’s desire to carry out mass deportations is overriding democracy and human rights concerns.

Rubio discussed immigration with a string of leaders during his trip. One of the outcomes that he celebrated was Salvadoran President Nayib Bukele’s offer to receive deportees of any nationality, as well as Americans convicted of crimes. Bukele said he would charge a “relatively low” fee to hold detainees in El Salvador’s prisons, which have been flagged by human rights watchdogs and the U.S. State Department for their poor conditions.

The United States cannot legally deport Americans. Trump seemed to acknowledge that reality on Tuesday, saying, “If we had the legal right to do it, I would do it in a heartbeat.”

Rubio also voiced concerns about Chinese influence in Latin America. Amid Trump’s threats about taking over the Panama Canal, Panamanian President José Raúl Mulino said that Panama would not renew its participation in China’s Belt and Road Initiative.

In Costa Rica—which has leaned toward the United States—Rubio praised the country’s efforts to keep Chinese technology out of its 5G network. He said that Costa Rica had been granted a waiver to continue receiving U.S. foreign assistance for anti-crime activities. Such waivers have been hard to come by amid the Trump administration’s foreign aid freeze.

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