This report describes the increased tensions in Mexican-U.S. relations after Mexican President Enrique Peña Nieto canceled an upcoming meeting with President Donald J. Trump following exchanges between the two leaders over social media concerning U.S. policies toward Mexico

Ribando Seelke, Clare

Villarreal, M. A.

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CRS INSIGHTMexican-U.S. Relations: Increased TensionsFebruary 1, 2017 (IN10641)|Related AuthorsClare Ribando SeelkeM. Angeles Villarreal|Clare Ribando Seelke, Specialist in Latin American Affairs (cseelke@crs.loc.gov, 7-5229)M. Angeles Villarreal, Specialist in International Trade and Finance (avillarreal@crs.loc.gov, 7-0321)On January 26, 2017, Mexican President Enrique Peña Nieto canceled an upcoming meeting with President Donald J.Trump after exchanges between the two leaders over social media concerning U.S. policies toward Mexico. In anaddress on January 25, President Peña Nieto vowed to protect Mexican migrants in the United States who are vulnerableto deportation and reiterated Mexico's refusal to pay for a border wall but also stated his "willingness to reachagreements" if they are in Mexico's interest. Mexicans have strongly supported Peña Nieto's actions with respect toPresident Trump. After a phone call on January 27, Presidents Trump and Peña Nieto issued a joint statement in whichthey agreed to work through differences as part of a "comprehensive discussion on all aspects of the bilateralrelationship."Advances in Bilateral CooperationUntil the 1980s, Mexico had a relatively closed economy and an independent foreign policy that was often at odds withthe United States. Those policies gradually shifted, however, as Mexico opened its economy to trade and investment andincreased collaboration with the United States. Since President Ronald Reagan, every first-term U.S. president has metwith his Mexican counterpart either prior to his inauguration or immediately thereafter. Mexican presidents haveemphasized collaboration with their U.S. counterparts, most recently on support for Mexico's domestic security andantidrug efforts.The bilateral economic relationship is important to both countries because of the high level of trade and strongeconomic ties that connect them. Mexico is the United States' third-largest trading partner, and the United States isMexico's largest trading partner. Since the North American Free Trade Agreement (NAFTA) entered into force in 1994,North American economies have become more integrated, including through extensive production chains that supportthousands of jobs in both the United States and Mexico. U.S. manufacturing industries—including automotive,electronics, appliances, and machinery—all rely on support from Mexican manufacturers. Approximately 40% of thecontent of imports from Mexico is made in the United States. Some 80% of Mexico's exports are destined for the UnitedStates, making Mexico heavily dependent on the U.S. economy. Many people in the poorer regions of Mexico also relyheavily on worker remittances from the United States ($25 billion in 2015), which mostly or completely cover basicneeds and may be used for capital invested in microenterprises.Mexico has become a strategic U.S. ally in regional and global affairs. For example, as apprehensions of Mexicans onthe southwestern border have declined to near historic lows, apprehensions of Central Americans have surged. Inresponse, Mexico apprehended more than 150,000 Central American migrants and record numbers of migrants fromAfrica and Asia in FY2015 and FY2016. To prevent terrorists from transiting its territory, Mexico has imposed strictvisa policies and collects and shares fingerprints and other data on all arrivals with U.S. officials. Law enforcementcooperation has led to the arrest and extradition of hundreds of Mexican drug kingpins over the past decade, includingJoaquin "El Chapo" Guzmán.Mexico's Tough ChoicesPresident Peña Nieto's approval rating has remained extremely low (under 25%) since 2014. Low oil prices, currencydevaluation, and investors' unease about U.S. trade policy have hurt the Mexican economy. Peña Nieto's governmenthas struggled to solve high-profile human rights cases, become embroiled in scandals, and faced security challenges,including the rising violence committed by organized crime groups competing to supply U.S. drug demand. Peña Nieto'ssurprise decision to invite then-candidate Trump for a high-profile visit to Mexico in August 2016 proved extremelyunpopular in Mexico, as it failed to influence Trump's rhetoric or positions toward Mexico. Fallout from the visit led tothe resignation of Mexico's Finance Minister, Luis Videgaray (who had organized the visit), although Videgaray is nowMinister of Foreign Affairs.Peña Nieto may have limited room to maneuver in future negotiations with the Trump Administration, as Mexicanlegislators and businesspeople are urging him to more vigorously defend Mexican interests. Mexico's sovereignty, itseconomic dependence on the United States, and the desire to preserve advances in bilateral cooperation are influencingPeña Nieto's decisionmaking.Economic and Political Implications of Tense RelationsPresident Trump has stated his intention to withdraw from or renegotiate NAFTA and potentially tax imports fromMexico to pay for the border wall. Either proposal could have considerable economic consequences. Mexican EconomicMinister Ildefonso Guajardo has stated that Mexico would respond "immediately" if the United States were to impose aborder tax and that Mexico would consider withdrawing from NAFTA if negotiations were not favorable to the country.The United States could face unfair trade cases under the World Trade Organization or retaliatory tariffs on U.S.exports. A potential trade war could disrupt North American production chains, resulting in job losses in both countriesand risking economic instability in Mexico.The Mexican public appears to be behind President Peña Nieto in his stance toward President Trump, but public opinioncould turn against him if he fails to work productively with the Trump Administration. Discontent with Peña Nietocould increase voter support for Andrés Manuel López Obrador, a leftist populist who is unafraid to antagonize theUnited States, in Mexico's 2018 elections.OutlookThe United States benefits when Mexico is stable, prosperous, and secure. U.S. interests likely would be impacted ifMexico slipped into a recession or violence escalated, particularly along the border.Mexican-U.S. relations have generally grown closer over the past two decades. Common interests in encouraging tradeflows and energy production, combating illicit flows, and managing environmental resources have been cultivated overmany years. As evidenced by recent events, policy changes, or even rhetoric about potential policy changes, that runcounter to Mexican national interests can have consequences for bilateral relations. Tensions in these relations couldimpact Mexico's willingness to cooperate with the U.S. government on migration enforcement and illicit drug cropreduction, which traditionally have been among many U.S. policymakers' top concerns.

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