By Aishwarya Rai, International News Assistant Editor
On January 27, President Juan Manuel Santos of Colombia and Pedro Pablo Kuczynski of Peru met at the third Binational Cabinet in Arequipa, Peru, where they both pledged to stand with Mexico during its economic instability.
The Pacific Alliance, a Latin American trade bloc formed by Peru, Colombia, Chile, and Mexico in 2011 was initially created to allow for easy trade among markets in the growing Asia-Pacific region. President Trump’s policies have been marked as “turbulent waters” of protectionist rhetoric that require these nations to strengthen their trade ties and open markets to sustain healthy trade, which according to President Kuczynski, “has done (them) so much good in the past.”
President Trump was not explicitly mentioned during the conference, however, President Kuczynski’s comments made it evident that there was some dissent from the traditional US allies from Latin America.
Trump’s insistence on getting Mexico to pay for a wall, to place taxes on Mexican imports, and to scratch the NAFTA trade deal unless the US gains more benefits has placed Mexico in a state of economic uncertainty and created threats to the Pacific Alliance’s trade mobility and efficiency.
The Mexican peso has been volatile; on January 26 after President Trump and President Enrique Pena Nieto of Mexico exchanged over Twitter that they will not be attending a pre-scheduled meeting, the peso dropped a significant 1.4% within a few hours, recovering only slightly, according the CNN Money.
Since the election, the peso has lost about 13% of its value, causing Mexico’s Central Bank to state that their economic outlook has “deteriorated.”
The following effects include job uncertainty in both Mexico and the U.S, as tariffs would most likely distort the trade in both country’s markets. The IMF slashed Mexico’s economic growth forecast to 1.7% this year, down from 2.2% from last year.
President Trump’s protectionist policies pose a threat to a market that represents around 200 million people, according to Reuters.
It has become clear that Mexico is currently taking the hardest hit in the Latin American region.
A version of this article appeared in the Tuesday, February 7th print edition.
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