Anti-Mexico rhetoric from the US government is a windfall for Aussie businesses as the world’s largest economy looks to stifle trade with its southern neighbour.
According to Atradius managing director Mark Hoppe, President Trump’s threats to build a border wall and to impose high taxes on American car makers that don’t dismantle Mexican assembly chains are causing plenty of uncertainty for American firms. Yet this in turn creates opportunities for businesses of other countries, including Australia, that are more open to global trade.
“Trade threats like this are more serious than threats of wall-building and can cause widespread economic damage. However, this could also mean a huge trade opportunity for Mexico,” Mr Hoppe said.
“If built, the wall could let Mexico further diversify its export destinations and reduce its overdependence on the US for its foreign trade. With more than 120 million consumers in Mexico, this market diversification policy could offer suppliers from other countries opportunities to commercially penetrate one of the Latin American markets with the most commercial potential.”
Mr Hoppe said that as well as being part of the G20 and the Organisation for Economic Co-operation and Development (OECD), Mexico has greater economic stability than many other Latin American countries. It also has a population of 120 million people, about half of whom are under 30 years old, a key indicator of a growing, emerging market.
Mexico’s economic performance also tells a promising story: GDP growth slowed down in 2016 but still increased by 2 per cent; the government deficit is at 2.6 per cent of GDP; and public debt at 50.2 per cent.
“Many Australian companies are already fast developing a significant footprint in Mexico across a range of sectors such as advanced manufacturing, education, energy, food and agribusiness, health, infrastructure, mining, and technology,” said Mr Hoppe.
“Mexico is Australia’s largest trading partner in Latin America. Given the current political and economic developments, this partnership could prove to be even more beneficial for both countries in the future.”
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