Mexico’s moment of resolve

US President Donald Trump’s immigration wall and nebulous border tax plans are sparking a Mexican backlash likely to find expression in the country’s oil patch. US companies have a lot at stake.

The abrupt souring of bilateral relations coincides with Mexico’s historic opening of upstream, midstream and downstream sectors that had long been the exclusive domain of state-run Pemex. The dismantling of the company’s monopoly was already a lot to swallow for Mexicans nurtured on resource nationalism that was embodied by their much-diminished national champion. Trump’s blunt words threaten to persuade Mexicans that this sweeping reform path, quietly encouraged by Washington, is a misguided route to submission, as interpreted by the country’s emboldened political parties on the left.

US oil companies and providers of oil services and supplies are invested in the Mexican reform process, imperfect as it is. A whole host of opportunities from pipelines to product imports suddenly became available after the landmark reform was passed in 2014, and US firms were among the best placed to compete.

Trump’s confrontational approach will not directly short-circuit the energy reform. But it is compounding pressure on Mexico’s unpopular president Enrique Pena Nieto to defend his country with short-term measures, and unleashing emotions that will color the way the process is rolled out as his opponents position themselves ahead of 2018 elections.

It may be too late to expect that Trump’s constituents in the US business community will soften the new president’s approach toward Mexico. Even if they do, Trump’s harsh words are already uniting Mexicans in a way that could haunt Washington long after the mercurial real estate tycoon returns to his gilded tower.

One thought on “Mexico’s moment of resolve

  1. Oh cmon, pretty soon It will the “harsh words” that will forever live in infamy. Grow up people. Get a life and join the real world. We must support our laws and to do that we need a better border solution whether it’s a real wall or a metaphorical one, we cannot sit back,do nothing, let 1000s of jobs go to Mexico, and leave an open door for whomever wants to come. They should have to go through a deliberate but fair process to assess whether they want to be and whether they are capable of being a tax paying contributor to the community.

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