The Republican case for Mexico

Trump's re-election is still reason to be “bullish on Mexico,” says Republican Senator.

Donald Trump has won the US presidential election by a substantial margin. His vision of the world will now take hold of politics in that country and beyond for the foreseeable future. One of those idiosyncrasies is that the world has cheated the US when it comes to international trade. 

Of course the United States could (eventually) cut itself off from the world trade system and become an economic island where it produces and consumes everything locally. An unlikely proposition perhaps, but never in living memory has US politics US been so keen on economic nationalism. 

Large sections of the Republican and Democratic parties—especially demographics crucial to Trump’s win—are fed up with what they see as an unfair global economic system. The US has responded accordingly, with “de-globalisation” well underway beyond any single Trump administration. 

Of course the US could become an economic island, but that would leave it poorer, weaker, and less safe than it would otherwise.  

Cars made entirely in the US? Only if you’re willing to pay eye-watering prices for the cheapest sedan. Retaliating countries would respond by putting up their own walls, no longer buying US made goods.  

The list of downsides is long, but the solution has somehow been elusive. Perhaps it is not politically advantageous to propose a plan to support more open relations with other countries, but one bipartisan group of US lawmakers has taken that gamble—and Mexico lies at its centre. 

The Americas Act: A new US vision for a regional alliance 

Without knowing it, every day, places far removed from Mexico—whether physically or in the popular imagination—experience the boom of bilateral trade. Just ask Bill Cassidy, a Republican Senator for Louisiana. He quoted the importance of Mexico not just as a destination for Louisiana rice—the state’s top international buyer—but as a source of foreign direct investment.  

A lot of nearshoring talk revolves around US investment in cheap factories in Mexico. In St Gabriel, Louisiana, the story is the opposite, with Mexico’s Orbia building a factory to contribute to the local creation of an EV-battery supply chain. Across the state, in 2021, Ternium—a steel company based in Monterrey—invested close to $100 million dollars in a plant in Shreveport. 

That’s why Cassidy cosponsored The Americas Act, along with three other Republican and Democratic senators, to strengthen regional relations with a clear-eyed understanding of what drives their constituents. As opposed to the pure trade logic of the US-Mexico-Canada Agreement (USMCA), Cassidy’s proposal can be broken down into different prisms; some touting the benefits of trade, others migration, others national security. 

“Each prism is equally valid,” Cassidy told The Mexico Political Economist. “So, my hope is that whatever prism is most important to the person I am speaking to, that he or she understands that and sees this as a solution.” 

Trade: A giant continent is a sort of island, right? 

The economic aspect of the Americas Act is reminiscent of the aspirations of the late 20th century—namely, trade and development as forces for good. “The beauty of capitalism is that all boats rise with the tide,” mused Cassidy.  

But it also accepts the stark realities of a 21st century economy. “I am very bullish on Mexico and Latin America,” said Cassidy, because “there are some things that are not going to be produced in the United States. Period. End of story. There are a lot of ag products that flow north. People have learned to enjoy berries all year round. There is going to be this trade.” 

The Americas Act proposes that democratic countries across the continent, playing by the rules, should be integrated into the USMCA.  

To some Mexicans this might seem like a dilution of Mexico’s special trade relationship with the US, but Cassidy believes the opposite. “Imagine Costa Rica joining the USMCA. That would do nothing to hurt Mexico.” Instead, he underscored how this policy of Central American integration coincided with the Mexican government’s interest in developing the Northern Triangle (Guatemala, Honduras, and El Salvador) within their framework of advancing the economic interests of the poorer Mexican southeast.  

Like Kennedy’s Alliance for Progress before, and Roosevelt’s Good Neighbor Policy before that, the America’s Act links development, trade, and democracy in the region, and seeks to incentivise it. 

But there is another, more hard-nosed, logic in this iteration of a pan-American deal. 

US National Security: Hawks for regional trade 

There is a less liberal prism which binds Democrats and Republicans more than any issue: The perceived threat of China. “If you look at what’s being discussed on the right and the left,” said Cassidy. “It’s the need to have a coherent policy vis-a-vis China and the recognition that China is making inroads in the Western Hemisphere.” 

His and other US policymakers’ worry is that China is seeking to monopolise the extraction, production, and sale of commodities that the US needs. It holds stake in strategic areas, like the Panama Canal, oil investments in Guyana, and deep-water ports in Peru. “If China controls those resources, that would be problematic for us,” said Cassidy.   

Moreover, 60% of every dollar invested in Mexico comes back to the US economy while only 15% returns from China. That, according to Cassidy, is 85 cents on the dollar being used against US interests. “Even when people aren’t thinking about trade, when you present them with the fact that, with China, they use the profits of trade with the United States to build up their military, which then threatens the US. That begins to put Mexico in the light of: ‘What a great alternative! What a great partner!’” 

It’ll always take two to tango 

There are still many issues that no expansion of the USMCA into the rest of the Americas will fix. The fentanyl trade and migration—though actually global issues—really come into focus when they reach the US-Mexico bilateral relation. While China might seem like a distant threat, tensions among neighbours can often boil over, as they have in recent months with several Republican politicians threatening to bomb cartel members on Mexican soil if Mexico doesn't take care of them. 

“The Republican Party did not threaten to bomb Mexico,” replied Cassidy when The Mexico Political Economist put the issue to him. “There were some Republican lawmakers who were frustrated by the flow of fentanyl into the United States. … This is something the United States government and the Mexican government should find common cause on.” 

Though the polarisation of the US election seems to make common causes a distant prospect, the bipartisan proposal led by this Republican Senator might show the pragmatic way forward.