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Trump To Continue Creating volatility for Mexico: Analyst

President-elect Donald Trump's administration may create uncertainty and risks for Mexico as businesses delay investment decisions. 



In the past three months, the Mexican peso has lost around 11 percent of its value to the dollar.

Meanwhile, many are speculating on how Donald Trump will carry out his campaign pledges once he is in office, which include: a border wall with the country, paid for by Mexico; renegotiating or leaving the North American Free Trade Agreement; and potential taxes on goods created in Mexico for sale in the U.S.

According to Jimena Blanco, head of Americas at Verisk Maplecroft, we will have to wait and see whether Trump will follow through with his campaign pledges, which could create problems for Mexico.


"I think the Trump trade is going to continue creating volatility for Mexico for the foreseeable future," she told CNBC's Squawk Box.


Donald Trump's tendency to use the social media platform Twitter could also impact Mexico.


"We see this policy of using Twitter as a way of communicating with companies and CEOs, we're likely to see companies looking at Mexico, taking a pre-emptive stance and maybe reconsidering or delaying their investments to see actually what happens when the new administration takes power in the White House," she said.


As an example, last week Ford Motors scrapped plans for a $1.6 billion plant in Mexico and instead announced plans to invest in its Michigan facilities. Ford CEO Mark Fields cited Trump's policies as one of the reasons for the change.


"We're also encouraged by the pro-growth policies that President-elect Trump and the new Congress have indicated they will pursue. We believe these tax and regulatory reforms are critically important to boost U.S. competitiveness," Fields said during a press conference.


Worse for Mexico, it has little leverage against these potential changes, according to Blanco.


"To be honest, there's very little that Mexico itself can do," she said.


"I think the power here lies with the U.S. companies lobbying the Trump administration and saying: wait a minute, there's about 5 million jobs in the United States riding on this relationship with Mexico, and if we increase tariffs or walk out of NAFTA, those jobs will be at stake."

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