The article discusses the economic implications for Mexico and Canada if the US were to exit the T-MEC, a move proposed by Donald Trump, although experts deem it unlikely.
The article examines the potential consequences of a hypothetical withdrawal by the United States from the T-MEC trade agreement, a scenario suggested by Donald Trump. While the likelihood of such a move is considered low by economic experts, its implications could be severe for Mexico and Canada. Without the tariff exemptions currently provided under the agreement, exports from both countries to the US could be cut by half, potentially jeopardizing around 6% of the GDP for both nations. This risk has already led to immediate reactions in the financial markets, evident in the depreciation of the Mexican peso following related reports.
Experts consulted by Bloomberg have indicated that due to the high level of integration among the three economies, particularly in the automotive supply chains, a total withdrawal from the T-MEC would be economically impractical for the US. The interconnectedness of these economies means that breaking away from the agreement would likely inflict more damage on the US economy than it would on its northern neighbors. With the United States gearing up for midterm elections in November, the Trump administration may seek to avoid any major economic fallout that could arise from such a drastic change in trade policy.
In this light, while the article portrays the hypothetical scenario as deeply concerning for Mexico and Canada, it emphasizes the improbability of an actual US withdrawal. The situation highlights the complexities of international trade relations and the significant ties that bind the three North American economies, suggesting that despite the rhetoric, practical economic considerations will likely prevail over political posturing.
