The Trump fear
Earlier this week, the American dollar rose to a record high against the Turkish Lira, upon which President Recep Tayyip Erdoğan called on citizens to convert their foreign exchange into liras. Yet it is not only Turks who are concerned nowadays. There are some who are in a much worse situation than us: The Mexicans.
The Mexican Peso has crumbled so much that the head of Mexico’s Central Bank has just declared that he will quit in July. This has dealt a further blow to the country’s economic turbulence.
But the expectations of the Turkish and Mexican people are diametrically opposed: The Turks expect the lira to recover once Trump takes the presidential seat, while the Peso is falling because of Trump’s election as president!
I have been in Mexico for the last few weeks and have had the chance to observe how afraid Mexicans are of Donald Trump. All the headlines and TV stations are full of his news. Will the new president really build up a wall along the border? Will he kick out the Mexican community out of the U.S., as he promised during his election campaign?
Mexicans’ fear is so great that two weeks ago Mexican President Pena Nieto published a message addressing Mexican residents in the U.S. “Fellow countrymen, these are times of uncertainty. Be calm, don’t fall into provocation and don’t be fooled. Our government and the Mexican people are with you!” Nieto said, while warning them to “stay away from discussing politics as much as you can.”
For its citizens abroad, the Mexican Foreign Ministry also released a video titled “We are with you,” which gave similar messages, while a toll-free number has been created, free to use by Mexican immigrants living abroad. The hotline will be available 24/7 in order to help fearful Mexicans in the U.S. Apps for mobile phones are next in the plan.
Their fears are far from baseless. Today every Mexican family has at least one member residing in the U.S., with he/she transferring money to his/her family and hometown. Today there are about 30 million Mexican immigrants in the U.S., and the Mexican economy is heavily dependent on their remittances.
Furthermore, Donald Trump has pledged to leave the North American Free Trade Agreement (NAFTA) if it cannot be improved to “his liking.” He has said little about what kind of improvement he wants, apart from halting the migration of U.S. factories and jobs to Mexico. Prior to NAFTA, Mexico’s export to the U.S. were only 8 percent of its total export volume, while today it is about 80 percent, making the U.S. Mexico’s biggest import market and trading partner.
Trump also vowed to pull out of the Trans-Pacific Partnership Agreement (TPPA) on his first day in office, which has driven Mexicans up the wall! The TPPA is one of the most ambitious free trade pacts ever negotiated. It would provide commercial unity among 12 nations on both sides of the Atlantic, i.e. uniting the west coast of America with eastern and southeast Asia, and was expected to take effect very soon. Mexico – being a partner to both agreements mentioned - now feels on a knife-edge.
Beyond all this, a vast amount of American companies have big long-term investments in Mexico, especially in the textile and automotive sectors. Nowadays Mexicans are also afraid that these firms might pull out once Trump takes over.
Taking into account that 51 out of every 100 people are living below the poverty line in te country, it is not easy to overcome these fears.
