Although the US elections are a toss-up, the US’s chief economic advisor Stock Exchange House Vectorthe economist Rodolfo Navarrete Vargas, warned that an electoral victory for Donald Trump on November 5 would be dangerous for global trade and it would also affect the Mexican economy.
In a virtual press conference, teacher Navarrete Vargas said that according to polls, in the United States there is practically a technical tie between the candidates Kamala Harris (Democratic Party) and Donald Trump (Republican Party).
However, the injection of many million dollars bets tilt the polls in favor of former President Trump.
“We are in an unprecedented situation due to the technical tie, as the specialists call it. The bets are in favor of Trump, there are people willing to give a few million to tip the balance in his favor. That is what is happening right now in the American campaign.
“The dollar moves based on the bets that Donald Trump wins.
“About the effects on the Mexican economythere are several elements that we have to consider in two or three stages.
“We are currently experiencing the first stage, which is prior to the elections. It is already affecting the behavior of the exchange rate, interest rates, inflation and economic growth in Mexico. In the first stage, the exchange rate exceeds 20 pesos per dollar motivated by the uncertainty and the interest rates have moved.
“Yes Trump and we move on to the second stage which is the taking of protest, the exchange rate will suffer more strongly and perhaps in January of next year the dollar reaches 22 weights. The election is a financial stress scenario. If Trump wins, all the economic variables will begin to move and the one that will immediately suffer will be the exchange rate.”
“Kamala scenario”
The opposite would happen if Kamala Harris wins.; The dollar exchange rate would begin to appreciate little by little and perhaps reach 19 pesos or less and perhaps even 18.
However, they say, the possibility of a post-election conflict, as happened when Joe Biden beat Trump four years ago, generated a reaction and effect on the exchange rate.
“If Trump again does not recognize the results against it, it could destabilize the exchange rate and it would be prolonged so that the dollar returns to a normal trend,” he said.
Alert in Mexico for possible Trump victory in the US; so it would affect
Los medium-term effectscontinued teacher Navarrete Vargas,
“The medium-term effects for Mexico have to do with what happens with industrial activity in the United States because the Mexican economy is closely related through the manufacturing sector and exports,” he said. “What happens in the medium term with The Mexican economy will depend on what it does the new president with his economic policy, the measures he applies and what he will do with American industry. You can see the manufacturing production of Mexico and the United States. It has been contracting in negative territory for a year and a half, the Mexican economy has defended itself but it is already falling,” he noted.
“Interest rates are higher in Mexico and this affects domestic demand, which is the only factor that kept us strong but it is already beginning to weaken.”
Important warning
In conclusion, Navarrete Vargas warned that “what is going to happen in the coming years in the Mexican economy will depend on what the next president of the United States does with his industrial activity”.
And what is very Worrying for Mexico if Trump wins is its announced tariff policy.
If applied in a generalized manner, they pointed out, it can be counterproductive, it can generate a weakening and slippage of the exchange rate, it can deteriorate the economy and if they see it in the long term, the American economy is resorting to protectionism to defend its companies.
US Elections
The fundamental topics of the bilateral discussion: trade balance and China-Mexico.
If Trump wins, he will attack Mexico on these issues through threats of tariffs, which are instruments of pressure against Mexico. Trump will threaten if such things are not fulfilled, Mexico will have to make a concession
If Kamala wins it will be the opposite. It is not that she is not concerned about these bilateral issues, they pointed out, but it is most likely that she will negotiate, she will have panel consultation tables. He is not going to threaten or use punitive measures against Mexico, but there will simply be negotiations between both governments.
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**Interview with Rodolfo Navarrete Vargas: Economic Implications of the Upcoming US Elections**
**Interviewer:** Good afternoon, Mr. Navarrete Vargas. Thank you for joining us today. With the US elections rapidly approaching, can you share your perspective on how a potential victory for Donald Trump could impact global trade and the Mexican economy?
**Rodolfo Navarrete Vargas:** Thank you for having me. The current political landscape is indeed precarious, with the polls indicating a technical tie between Trump and Kamala Harris. Should Trump win on November 5, it poses significant risks—not just for the US, but for global trade and particularly for Mexico’s economy.
**Interviewer:** You mentioned a ”technical tie.” What do you mean by that, and how does it influence market expectations?
**Rodolfo Navarrete Vargas:** A technical tie means that the candidates are almost neck-and-neck in voter support. This uncertainty has caused fluctuating dynamics in the markets. We’ve already observed the exchange rate exceed 20 pesos per dollar due to this uncertainty. Moreover, substantial financial bets are being placed on a Trump victory, which further skews perceptions and reinforces a volatile atmosphere.
**Interviewer:** What are the immediate economic effects you foresee if Trump takes office again?
**Rodolfo Navarrete Vargas:** We are currently in the first stage of economic reaction—before the elections. If Trump wins, we could see a much stronger impact during the second stage, the transition period. I wouldn’t be surprised if the dollar reaches 22 pesos in January due to heightened financial stress. The immediate variables affecting the economy will be the exchange rate, interest rates, and inflation.
**Interviewer:** And what scenario would unfold if Kamala Harris were to win the elections?
**Rodolfo Navarrete Vargas:** In that scenario, we would likely see the dollar appreciate gradually, potentially reaching 19 or even 18 pesos. However, there remains concern about post-election unrest similar to what occurred four years ago. If Trump were to contest the results again, it could destabilize the exchange rate and prolong market instability.
**Interviewer:** With regard to medium-term effects, how would Trump’s policies impact the manufacturing sector in Mexico and the overall economic relationship?
**Rodolfo Navarrete Vargas:** If Trump is re-elected, medium-term outcomes will greatly depend on his economic policies. The US and Mexican economies are intertwined, especially within the manufacturing sector. If industrial activity in the US is negatively affected, Mexico will feel the pinch as well. We’ve already seen contraction in both economies’ manufacturing outputs. High interest rates in Mexico could further dampen domestic demand, which was a crucial support for our economy.
**Interviewer:** Thank you for your insights, Mr. Navarrete Vargas. Clearly, the upcoming elections hold considerable weight not only for the US but for its trading partners like Mexico as well.
**Rodolfo Navarrete Vargas:** Indeed, the implications are significant, and we must keep a close watch on the developments leading up to and following the elections. Thank you for having me today.
