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A Match Made In Heaven? China And Mexico Talk Trade

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A Match Made In Heaven? China And Mexico Talk Trade

President Trump used tough language regarding tariffs on both China and Mexico during his campaign. Now the two nations are looking to team up for their own trade deal. China’s ambassador to Mexico, Qiu Xiaoqu, has declared that China is ready to talk to Mexico about a “free trade agreement.” “There is no difficulty from China’s side,” Qiu said last week. “We have great interest in deepening and broadening these ties.”
President Trump is planning to meet with President Enrique Peña Nieto this week at the G20 Summit in Germany. This will be the first time they have met since Trump took office. President Trump will meet with Chinese President Xi Jinping at the summit as well. The president of Mexico was supposed to meet with Trump in January but canceled his trip when Trump tweeted that he should only come if Mexico were willing to pay for the border wall.
Looming shortly is the planned renegotiation of NAFTA by Canada, Mexico, and the United States in late August. This meeting may have a different focus if Mexico and China can develop their trade deal.
President Trump has already threatened to withdraw from NAFTA and frequently calls it a “terrible deal.” So Mexico has been busy looking for new economic alliances, and China seems ready to negotiate. Mexico’s economic secretary, Ildefonso Guajardo, has planned a visit to China in September.
“It is to a certain degree political maneuvering … to try to establish a united front against the U.S.,” says Edward Glossop, an economist at Capital Economics, a research firm. “The economics don’t make massive sense; it’s not an obvious deal.” Most experts admit that it is unlikely China would become a major buyer of Mexican goods because of the distance involved in transportation as well as cheaper rivals in Southeast Asia. And a trade deal that would cut tariffs on Chinese goods would risk more Mexican manufacturing jobs.
China-Mexico trade grew to up to $43 billion last year, but it is pale in comparison to the $580 billion in trade between the U.S. and Mexico. But Mexico is persistent in making sure Trump knows that they are looking elsewhere. They have accelerated their talks with the European Union and want to have stronger ties with Argentina and Brazil. “It sends a signal that we have a lot of alternatives,” Guajardo said about the China trip.
What do you think about this possibility of Mexico and China bypassing Trump’s threats about NAFTA?

Credit: CNN Money

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