Trump's Diatribes Against Free Trade Have Already Done Damage

When people ask me whether Donald Trump will be good or bad for Latin America, I respond that he has already been bad, because his aggressive rhetoric against Mexico and anti-free trade tirades are scaring away investment in the region. This week, the International Monetary Fund partially confirmed my fears.In its first economic forecast of 2017, the IMF said the world economy will "pick up pace," growing by 3.4 percent this year and by 3.6 percent in 2018. But the exception will be Latin America, it said.The IMF revised down its previous economic projections for Latin America, saying that the region will grow by a lackluster 1.2 percent this year and 2.1 percent in 2018. In addition to slower-than-expected growth in Brazil and Argentina, it cited what it politely described as "increased headwinds from U.S.-related uncertainty in Mexico."Curious about that, I called Alejandro Werner, head of the IMF's Western Hemisphere Department, and asked him about the economic impact so far of Trump's vow to build a wall on the Mexican border, slap a 35 percent border tax on car imports from Mexico, revise the NAFTA free trade agreement with Mexico and Canada, and kill the 12-country Trans Pacific Partnership that includes Japan, Mexico, Peru and Chile.Werner said it's premature to talk about a region-wide negative psychological impact, because Brazil and other countries are growing slower than expected for domestic reasons. But he added that Trump's proposals have already hurt investments Mexico -- the region's second biggest economy -- and could hurt Central America.About 80 percent of Mexico's exports go to the U.S. market, and Central America depends heavily on family remittances, which would fall greatly if Trump dramatically increases deportations."Uncertainty over future U.S. trade policies is moving many corporations to postpone their investments in Mexico," Werner told me. "It's driving down investments."He added that Latin America's most affected countries are those that rely the most on the United States for their exports, family remittances, tourism and foreign investments. Trump's economic plans have also put upward pressure on U.S. interest rates, further scaring investments away from Latin American countries and making foreign loans more expensive, other economists say.Asked what would be the best scenario for Latin America under Trump, Werner said that if the U.S. economy grows -- whether it's because of sound economic policies or short-lived populist measures -- Latin America's commodity exporters will benefit. "If there is more infrastructure construction in the United States, that will help Latin America's exporters of steel, copper, et cetera," Werner said.Other economists see another potential upside for the region: If Trump decides to focus his protectionist policies on China, rather than Mexico, and slap higher import taxes on Chinese than on Mexican products, many manufacturers may decide to move from China to Mexico and Central America, they say.My opinion: Trump's diatribes against free trade -- "They are killing us" -- and vows to deport all undocumented immigrants, most of whom he has said are "rapists" and "criminals," have already had a negative economic impact in Latin America.It's time for Trump to start trying to strengthen, rather than weaken, Latin American economies. Otherwise, his populist demagoguery will backfire, and he will provoke an economic crisis in Mexico and other countries that will result in more illegal migration to the United States, more drug trafficking and more anti-Americanism.One more thing: The apparent decision by nearly 60 U.S. lawmakers to boycott Trump's inauguration is a mistake. Yes, Trump may have been elected with the help of Russia and FBI director James Comey, and for five years he has led a campaign to de-legitimize President Obama claiming -- falsely -- that Obama was born in Kenya, but no U.S. branch of government has yet declared Trump illegitimate.Whether we like it or not, Trump won the election. And unless a U.S. investigation concludes that the Trump campaign was in cahoots with Russia during the campaign, or Trump is impeached for other reasons, he deserves to be treated as president. Even if he himself had threatened not to do the same if Hillary Clinton had won.Andres Oppenheimer is a columnist for the Miami Herald. Email:  Continue reading...

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