MEXICO CITY — Amid one of the worst crises in U.S.-Mexico relations in years, President Trump and President Enrique Peña Nieto sought to ratchet down the tension, speaking for an hour over the phone Friday morning and agreeing, at least according to the Mexican side, not to discuss publicly the funding of a border wall that Trump has vowed to build.
Even with that slight rapprochement, the threats that Mexicans see to their economy from Trump’s proposals remain unchanged. The potential disruption of cross-border free trade, even more than the wall, has upended the normal order in Mexico.
The reclusive billionaire Carlos Slim, who rarely addresses the media, held a news conference for more than an hour to discuss the “civilizational changes” underway and to warn that a proposal to impose punitive tariffs or a tax on Mexican goods would come back to bite American consumers and make the U.S. economy less competitive.
“The best wall is investment, which generates employment in Mexico,” Slim said. “Mexico is the best partner the U.S. has and also the most complementary.”
Peña Nieto on Thursday called off a scheduled visit to Washington amid a dispute over who would pay for Trump’s border wall. Trump has insisted that Mexico will pay, but Mexico has refused. The makeup call on Friday was described by Trump as “very friendly,” but he also suggested that it was a prelude to tough negotiations over what he described as an unfair trade relationship.
“Mexico has out-negotiated us and beat us to a pulp,” he said. “They’ve made us look foolish.”
Peña Nieto agreed that the call was “constructive.” On the issue of payment, a Mexican statement said both sides agreed to “resolve their differences” as part of ongoing discussions about the bilateral relationship.
“The presidents also agreed for now not to talk publicly about this controversial issue,” the statement said.
Trump’s decision to move forward with building the wall and his threats to dismantle the North American Free Trade Agreement (NAFTA) have opened a serious rift between the two neighbors. Mexican business leaders and politicians warned of economic trouble and the possibility of unrest if trade ties between the countries are disrupted by measures proposed by the Trump administration.
Mexico’s economy was sluggish even before the prospect of a U.S. abandonment of NAFTA or an imposition of a 20 percent tax on imports from Mexico — an idea the White House floated Thursday. The value of the peso has fallen 13 percent since the election and is plumbing historic lows against the dollar. Economists have downgraded prospects for economic growth. A rise in gas prices that started this month, part of reforms by Peña Nieto to wean the country off fuel subsidies, sparked looting, roadblocks and clashes between protesters and police.
If Mexico goes into a recession, as some economists have predicted if a trade war erupts with the United States, this could lead to further violence in a country already on edge.
“We might have unrest,” former president Vicente Fox said in an interview this week. “If you have a poor Mexico, yes. If there is hunger, yes. If unemployment comes back to high levels, yes, we will have problems. And the consequences will hit right back on the United States.”
Mexico once had an economy so closed that smuggled candy was sold in itinerant markets. These days, Mexicans sip Starbucks beverages, shop in Walmart stores and watch shows on U.S. streaming services such as Netflix.
Mexico’s exporters also rely heavily on the U.S. market. Northern Mexico has been transformed in recent years into a robust manufacturing belt that produces automobiles, flat-screen televisions and countless other products. Major American corporations — including Whirlpool, John Deere, Ford and General Motors — have become fixtures here.
Mexican agriculture and food exports are ubiquitous in U.S. stores. Mexico is the world’s largest beer exporter, and the country supplies 80 percent of the avocados consumed in the United States. Growers expect that more than 10,000 tons will be eaten in the form of guacamole on Super Bowl Sunday. Avocado farmers think they have stimulated the American appetite, which builds the market for business on both sides of the border.
“We don’t think that we have competitors,” said Ramón Paz, president of an association of Mexican avocado farmers. “There is no other country that can supply the consumption in the United States.”
Mexico has expressed a willingness to discuss reforms to NAFTA, but if the country is offered a deal that is worse than the present arrangements, it might walk away from the agreement, jeopardizing jobs on both sides of the border. Mexican business executives and officials noted that a 20 percent tax on imports from Mexico would make those products more expensive for American consumers. Some expressed exasperation that so much effort must be expended to convince the United States about the benefits of free trade.
“It’s paradoxical,” Juan Pablo Castañon, the president of Mexico’s Business Coordinating Council, a coalition of business groups, said in an interview. “Twenty-five years ago, the United States convinced Mexicans about free trade. Today we’re trying to convince Americans about free trade.”
Castañon said Mexico should reciprocate on any U.S. tax or tariff. If the United States negotiates with Mexico as a sovereign and respected partner, he said, both countries can become more competitive and prosperous. If not, then “the first option is not to have NAFTA.”
The public appearance by Slim, one of the world’s richest men, showed the degree to which Trump’s proposals have unsettled the business community here. Slim recently had dinner with Trump in Florida and called him a “great negotiator.” But he also suggested that Trump was naive to think he could recapture the lost glory of 20th-century U.S. manufacturing. He said it was “totally irrational, costly [and] unaffordable” to transfer thousands of Mexican industrial jobs to the United States.
Slim predicted an “arduous and difficult negotiation” with the Trump administration but said Mexico has its own economic strengths, and he expressed surprise and satisfaction over his country’s “national unity” in the face of Trump’s “challenge.”
Still, others were less sanguine about what lies ahead. Gov. Graco Ramírez of Morelos state told a Mexican newspaper that Trump has declared “war” on Mexico and that dialogue with the U.S. president was already “exhausted.”
Branigin reported from Washington. David Agren and Gabriela Martínez in Mexico City contributed to this report.