Monterrey has grown wealthy on North American free commerce. Industrial parks catering to a few of the world’s largest firms line the six-lane freeway to the airport, whereas town’s modern high-rises sprawl throughout an ever-increasing space between the mountains.
The regiomontanos, as native individuals are identified, are hard-headed and entrepreneurial, or as one govt mentioned: “Whereas others cry, we promote the handkerchiefs.” Some admire President Donald Trump’s pro-business, anti-woke line.
So Monterrey’s enterprise leaders imagine they will climate Trump’s threats to upend the free commerce deal linking Mexico, the US and Canada.
Julio Escandón, chief govt of Banco Base, an area financial institution, mentioned he had not seen a drop in demand for loans. “What I decide up from conversations with enterprise individuals who work with international firms right here . . . is that it’s not going to occur,” he mentioned of Trump’s threats of across-the-board tariffs.
Tariffs focused at specific sectors had been doable, he added, “however an across-the-board 25 per cent tariff . . . is unsustainable within the medium to long run”.
Trump announced tariffs of 25 per cent on all Mexican and Canadian imports on February 1, then paused the transfer for a month after the leaders of each international locations promised on the eleventh hour to beef up border safety and crack down on drug trafficking.
On Sunday, Trump made a contemporary transfer, pledging a 25 per cent tariff on all metal and aluminium imports, together with from Mexico.
But enterprise leaders in Monterrey, the place producers make every part from Lego to televisions to automotive elements for export, are quietly assured that the financial logic of North American free commerce will prevail.
Mexico is now the US’s largest buying and selling associate, exporting $500bn price of products north final yr.
Mexican chief executives declined to be quoted by title on the delicate matter of US tariffs, preferring to defer to the federal government whereas negotiations with Washington proceed. However a enterprise lobbyist within the metropolis famous: “We’ve been via a Trump administration earlier than.”
She recalled that in his first time period, the US president vowed to shut the Mexican border, then relented when Mexico took the powerful line he needed on migration. “We can have frights on occasion, however ultimately Mexico is the nation which issues most to the US, and Trump is aware of that.”
Emilio Cadena, chief govt of Prodensa, which helps international firms arrange manufacturing in Mexico, mentioned that whereas some firms had been in “wait and see” mode, most buyers had been pushing forward with their plans. Sure firms, he mentioned, had been pondering of transferring manufacturing to the area and investing in each the US and Mexico. “Mexico is an enabler of the re-industrialisation within the US,” he mentioned.
One speaker at a current US Chamber of Commerce convention within the metropolis even joked that “Trump was one of the best president Mexico ever had”, referring to the comparatively sturdy funding Mexico attracted throughout his first time period, mentioned an individual who attended.
Trump’s early strikes in his second time period have nonetheless prompted a level of concern. “No one anticipated Trump to go this near imposing tariffs,” mentioned a Monterrey financier, noting that the US president went so far as signing the chief order to implement duties, earlier than giving Mexico and Canada a brief reprieve.
Juan Carlos Baker, a Mexican former commerce negotiator, mentioned Trump’s focus in his second time period talks with Mexico “is totally different to the primary time period, when Trump needed to destroy Nafta”, the North American Free Commerce Settlement that was changed by the present USMCA deal.
“Now tariffs are a punishment, and I worry that sooner or later the extent of tariffs will rely on whether or not Mexico does what the US desires on migration, safety and fentanyl. This may be very subjective.”
Some executives mentioned their companies would survive even when Trump finally imposed increased tariffs on Mexico. Labour prices in Texas are a number of instances increased than these in Mexico, which Mexicans imagine offers their nation an everlasting aggressive benefit.
The typical manufacturing wage in Nuevo León state, the place Monterrey is the capital, is round $33 per day, in keeping with state authorities information; in Texas it’s about $292 a day, in keeping with the Federal Reserve Financial institution of St Louis.
“All of the US enterprise individuals are lobbying Trump to not tear up their provide chains,” mentioned the Monterrey financier. “They’re our allies.”
Not everybody shares the optimism of the regiomontanos. Some 900km additional south in Mexico Metropolis, these immersed in politics are fearful. “Simply because there’s robust financial logic to sustaining North American free commerce doesn’t imply that’s what Trump will do,” mentioned one former Mexican official. “Populists don’t at all times observe financial logic.”
Some Monterrey enterprise individuals imagine that US strain on Sheinbaum for outcomes towards the murderous drug cartels might assist Mexico if it improves safety. However their essential concern is convincing Trump that he ought to see Mexico as an ally within the battle towards his largest enemy, China.
Banco Base’s Escandón believes Trump will find yourself being swayed by the argument that China is a a lot larger drawback for the US. US firms which have the president’s ear, reminiscent of Elon Musk’s Tesla, know that “the one option to compete with China is to place a plant in Mexico”, he mentioned.
Máximo Vedoya, president of the Caintra business foyer in Nuevo León, mentioned Trump was proper to lift the problem of unfair Chinese language commerce competitors.
However he added: “Why take motion towards Canada and Mexico when the frequent enemy is China? Built-in North American worth chains are one of the best ways to fight China. If we lose that provide chain, the roles received’t go to the US, they are going to go to international locations like India, Vietnam and Malaysia.”
Knowledge visualisation by Alan Smith and Ray Douglas
