Mexico and the US Presidential Election

If political conditions were normal and the economy were solid and growing, Trump would not have much difficulty getting reelected. However, political conditions are not normal, nor is the economy as solid as it appears.

One of the factors causing uncertainty for Mexico’s economy is the U.S. presidential election. Here’s why.

Currently, President Donald Trump’s reelection is not guaranteed. According to the betting site predictit.org, there is a 55% probability of the Democrats winning the presidency in the November 2020 election, and a 45% chance that the Republicans will remain in the White House. It could practically go either way.

If political conditions were normal and the economy were solid and growing, Trump would not have much difficulty getting reelected. However, political conditions are not normal, nor is the economy as solid as it appears.

As far as the matter of economic growth is concerned, the most recent figures show that it is decelerating. Black clouds are beginning to appear on the horizon, indicating the possibility of a recession next year. According to various predictive methods, the chances of this happening in the next 12 months are one in three. At the start of 2019, the probability of a recession was 10%.

As for the matter of politics, Trump is not a traditional president. On the contrary, he has broken the paradigms that guide how campaigning is carried out in his country. Typically, once a candidate won the White House, he would proceed to expand his electoral support in order to ensure his reelection. Instead, over the last three years, Trump has focused on currying favor with the same social demographic that elected him. Instead of becoming more moderate, he continues to have a polarizing effect. Consequently, according to the polls, 40% of the electorate currently supports him. This percentage not only supports but also idolizes him. Their support is very intense. Because of the indirect electoral system, this number of voters could result in his reelection. As in 2016, he might even lose the popular vote but gain enough Electoral College votes to win the presidency.

The issue is that, currently, Trump’s reelection is not going to be easy. We must remember that he is an excessively narcissistic man who is not used to losing. He will therefore do everything he can to win the 2020 election. He will not let his heart rule his head by any means. And as in 2016, since his electoral base loves to throw punches at our country, Mexico will be one of his favorite punching bags. He will strike at us in relation to three issues: immigration, trade and drugs.

The trade issue is particularly relevant to Mexico’s economy. This is not only because Trump could threaten to impose tariffs on us again at any moment, like he did in June, but also because of the question of the ratification of the new North American trade agreement, known as the USMCA. At the moment, according to the bets on predictit.org, there is only a small chance – 28% – that Congress will ratify the trade agreement this year. If the deal is not passed in 2019, it is unlikely that the deal will be passed in 2020 either, given the upcoming elections next year.

In the meantime, NAFTA will remain in force. However, we cannot rule out the possibility that, frustrated over the refusal of the Democrats in the House of Representatives to ratify the USMCA that he negotiated, Trump will lash out in a fit of populism and threaten once again to withdraw the United States from the agreement.

To add fuel to the fire, many of the Democrats who are competing to be their party’s presidential candidate support protectionism just as much, if not more so, than Trump. Elizabeth Warren, who is currently in the lead according to predictit.org with a 30% chance of becoming the Democratic candidate, has stated that she is against the USMCA, which she has discredited by calling it NAFTA 2.0. She believes that trade agreements should be made with greater consideration for her country’s blue-collar demographic.

This climate has injected Mexico’s future trade relationship with the United States with a dose of political uncertainty. Given the situation, many companies have decided to wait before investing in our country. They will wait until it becomes clearer who the Democratic candidate will be, what the presidential contest will be like and who will win our northern neighbor’s 2020 elections.