Gregory Brew / Oilprice
Fierce rhetoric from the Trump Administration, including promises to build a border wall and threats of a twenty percent tax on imports from Mexico to pay for it, have fueled speculation of a possible trade war between the United States and its third-largest trading partner. American goods and services trade with Mexico in 2015 equaled more than $500 billion. For Mexico, the border trade is even more important: the US is Mexico’s single largest trading partner and American demand for Mexican goods is the chief reason the country has been able to run a trade surplus.
Now, concerns are growing that restrictions on trade between the US and Mexico could affect the growing energy trade between the two countries. The bad news is that, after a somewhat chaotic exchange in which the Mexican president cancelled a visit to the US and the Trump Administration responded with threats of an import tax, only to backtrack on that threat, it’s tough to know what will come next in US-Mexican relations.