Mexico and the U.S. election: What does Biden’s victory mean for the economic relationship between Mexico and the U.S.?

The relationship between Mexico and the U.S. is close, complicated and strongly influenced by political power shifts.

On January 20, Joe Biden will take office as the 46th President of the United States of America. His presidency could redefine the economic relations between the two North American neighbors in various ways, with challenges and opportunities going hand-in-hand.

Prospects for a stable trade policy

In the past years, Trump’s restrictive trade policies, especially towards China, have mostly played into Mexico’s behalf. Since Mexico has proven to be an attractive export manufacturing base alternative to the United States, Mexican economy has benefited from U.S. punitive tariffs on Chinese products. Biden’s more diplomatic stance on the China conflict might partially counteract this advantage for Mexico.

At the same time, however, Biden’s victory in the U.S. election promises a different significant advantage for Mexico: a stable trade relationship prospect. In that regard, it is worth to bear in mind that Trump had also repeatedly threatened Mexico with punitive tariffs with the purpose to put pressure on the country, particularly in migration issues. Under the Biden’s government, on the other hand, Mexico can expect reliable market access – an important assuredness for the U.S. second-largest supplier.

Green energies – a turning point for Mexico?

When it comes to the energy industry, it is particularly clear that Biden’s victory consequences for Mexico walk a fine line between potential conflicts and opportunities.

Same as Trump, in recent years Mexican President López Obrador, has relied on traditional energy sources. In order to boost national economy, still dependent on oil, his energy policies are clearly aimed to strengthening the former state monopoly companies PEMEX and CFE.

In contrast, Biden advocates green, sustainable energy and is planning the return of the U.S. to the Paris climate agreement. Because of the close economic ties between the two neighboring countries, Biden’s election victory could prompt Mexico to shift to a more sustainable course in the energy industry as well. Precisely, Mexico must respond to the new U.S. climate policy in order to present itself as a competitive and sustainable partner, for example, in the production of electric cars or the construction of solar parks in the southern state of Texas.

Therefore, it becomes clear that in terms of both trade policy and energy, Biden’s assumption of office could represent an important turning point in the relationship between the U.S. and Mexico – optimally towards increasing stability and sustainability.

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