Trade Disparity Between US and Mexico Expands

The MXN experienced downward pressure after trade war anxieties stemming from Trump’s tough take on trade negotiations with Mexico caused a surge in the US demand for cheaper and more affordable Mexico-sourced goods, thereby increasing the trade disparity between the two countries. Mexican trade deficits jumped by up to 14% just in the first quarter of 2017, a stark contrast to the trade deficit recorded last 2016 in the same period. In addition, the Mexican Peso is also down by 8% against the USD as far as 2017 is concerned. Prior to this development, Trump has repeatedly threatened to build a border wall between the two countries and is now even considering a cancellation of the NAFTA agreement as part of the president’s plan to give new life to US-based factories. The NAFTA trade agreement involves Mexico, Canada, and the US and has enabled lower tariff levels, among others.