Mexico’s Peso Still In Downward Spiral After Trump’s Tweets

Spiral After Trump’s Tweets

He tweeted that if Mexico did not pay for the wall America needed, it would be best to cancel the meeting coming up.

Shortly before noon, Enrique Pena Nieto, Mexico’s president, called the meeting off. He told reporters that he let the White House know that he wouldn’t meet with POTUS next Tuesday.

After that, the peso dropped quickly, declining nearly 1.4% in several hours. While some of the losses were recovered, it was still down over 1%.

A peso is worth less than five cents. And, it’s mainly because of Trump.

The president has threatened Mexico with tariffs and has renegotiated a key trade agreement – NAFTA – that led to the sharp decline in the peso. The drop in the peso is a huge reflection of what investors expect with the country’s economy.

Of course, these trade threats Trump has made against Mexico isn’t all good for American workers. Why? Six million U.S. jobs are dependent upon Mexican trade, and the latest trade rules could risk those jobs.

40% of the parts that come into the use from a Mexican import will actually originate from the U.S. There are supply chains that run along the U.S., Canada and Mexico, with the workers’ job tied together.

Of course, a weaker currency works well for Mexico in that it’s easier for the country to sell its cheaper products to American buyers. However, a weak peso and a strong U.S. dollar is a problem for companies who sell their products overseas since they become costlier to foreigners.

It’s Trump’s trade threats that have resulted in the steep decline and is wreaking havoc on its community. Mexico depends deeply on its American trading, with more than 80% of the experts coming to the U.S.

Since election day, the peso has dropped 13% in value, and the president’s threats has resulted in the country’s central bank to claim the economic outlook has depreciated. The International Monetary Fund slashed the Mexico’s economic growth to 1.7%. The Mexican finance minister said there was a 2.2% growth last year.

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