When two members of President Donald Trump's Cabinet visit Mexico in the week ahead, the issue of immigration may dominate the headlines, but discussion of the countries' trade relations will pervade the talks.
Secretary of State Rex Tillerson and Department of Homeland Security Secretary John Kelly are scheduled to visit Mexico on Thursday. It will be the highest profile face-to-face engagement between U.S. and Mexico since President Trump's inauguration. Mexico canceled an earlier presidential visit to the White House after Trump tweeted, "If Mexico is unwilling to pay for the badly needed wall," then the meeting should be canceled.
And while talk of the president's wall and a subsequent immigration-related executive order did indeed ignite a firestorm, what's more important to note is that the trade trouble brewing between America and Mexico threatens to upend more than a half trillion-dollar business relationship.
Mexico is the second-biggest consumer of American-made products. American cars and trucks, plastics, and foods flow across the border. The Mexican appetite for American goods has jumped almost 500 percent since 1993, the year before the enactment of NAFTA. Over the same time period, the Mexican economy has doubled.
While it is difficult to parse out Mexico's importance to corporate America's bottom line, what's truly troubling here is that the trade tensions with Mexico could spread throughout the continent. That's not to mention that the tough talk with Mexico comes as Latin American business is already weak. Caterpillar's third-quarter sales in the region fell 16 percent. Ford continues to lose money in South America.
Long-term investors know it's economic results, not political rhetoric, that matter.
ABOUT THE WRITER
Financial journalist Tom Hudson hosts "The Sunshine Economy" on WLRN-FM in Miami, where he is the vice president of news. He is the former co-anchor and managing editor of "Nightly Business Report" on public television. Follow him on Twitter HudsonsView.