HomeNewsAnalysisHow Trump’s Economic Policies Promise to Upset Mexico’s Criminal Landscape
ANALYSIS

How Trump’s Economic Policies Promise to Upset Mexico’s Criminal Landscape

MEXICO / 20 JAN 2017 BY PATRICK CORCORAN EN

Donald Trump’s election sent a shock wave through Latin America and around the globe, and if his economic promises are met, his inauguration could do the same to Mexico’s criminal landscape.

Trump’s inauguration on Friday, January 20 marks a sea change from longstanding US government positions on a number of issues, from nuclear policy and Russian relations to finance and trade. In the latter realm, Trump has promised to renegotiate the North American Free Trade Agreement; has engaged in ongoing harassment of multinational firms planning to invest in Mexico; and has pledged to boost domestic manufacturing in order to reverse the trade deficit.

The general thrust of Trump’s policies began to manifest itself even before his inauguration, with his pressuring multinational companies to cancel factory investments in Mexico. This led to Carrier and Ford, among others, to beef up their capital investments in the US at the expense of their Mexican operations. Trump has also attacked Toyota and BMW for plans for future investments in Mexico, though with no evident change to their investment plans. But Trump’s agenda, fully realized, has the potential to sharply constrict Mexican exports to the US.

Thanks to these and other issues, Trump likely represents the end of 30 years of ever-deepening ties between the US and Mexican governments. This possibility has precipitated a collapse in the peso, and has provoked public displays of alarm by Mexican officials. President Enrique Peña Nieto has repeatedly refused to pay for Trump’s border wall, despite the campaign bluster, and recently discussed the possibility of using Mexico’s immigration and security policy as a lever to influence US trade policy.

SEE ALSO: Mexico News and Profiles

As with much of Trump’s policy agenda, there is a lack of coherency and comprehensiveness to his approach to the US southern neighbor — for instance, US trade is unlikely to reverse its trade deficit with Mexico as long as the dollar retains its current strength — but should Trump turn his economic pledges into genuine policy changes, it could provoke a series of deep changes in Mexican organized crime.

InSight Crime Analysis

At more than $300 billion annually, Mexican exports to the United States represent an ocean of commerce that offers drug traffickers — whose approximately $5 to $10 billion in annual business represent just a few drops in the overall bucket of legal trade — ample opportunity to hide. The millions of trucks, ships, and cargo planes crossing the border on an annual basis make slipping a few kilos of cocaine or heroin into the United States an easy proposition. But should that ocean dry up, moving contraband will become more and more difficult.

Even beyond restricting access to the US market, Trump policies that tamp down on Mexican exports could upset local criminal dynamics. A renegotiation of Nafta that reduced growth across the export-reliant North would also likely impede the recreational drug market, a growing secondary source of revenues for criminal groups in cities like Juárez and Tijuana. A generalized economic slowdown could also cut down on the opportunities for extortion and for laundering money through legitimate commerce.

Mexico’s interests writ large are largely aligned with those of its criminal groups, as a reduction in prosperity would target both parties similarly.

Should Trump follow through on his promise to build a wall across the US southern border and crack down on immigration, it could further upset Mexican criminal practices. Mexican criminal groups have increasingly derived profits from smuggling illegal immigrants across the border. If illegal immigration grinds to a halt, as Trump has promised, such revenues would almost certainly drop. A wall would of course also make it harder for human smugglers, or mules, to haul drugs or cash across the border through remote areas in Texas, Arizona, and New Mexico.

SEE ALSO: Coverage of US/Mexico Border

None of this is to suggest that Mexicans should welcome Trump’s harsh policies. On the contrary, what this shows is that Mexico’s interests writ large are largely aligned with those of its criminal groups, as a reduction in prosperity would target both parties similarly. Moreover, should the most pessimistic scenario come to pass, the likely result is more violence across Mexico, as existing gangs fight over the pieces of a shrinking pie.

There are also myriad other secondary effects on organized crime stemming from the policy changes Trump is promising. A long-term divide between the two governments could trickle down to security collaboration, after years in which shared intelligence has helped Mexico locate some of its most wanted men.

Ultimately, drug traffic is based on demand, and there is no realistic possibility that Trump — or any other government for that matter — will implement a plan that tamps down on US demand. That suggests that none of the possible effects of his economic policies laid out above would do much to limit Americans’ access to drugs, but would only temporarily upset the supply chains that feed consumer markets from New York to Chicago to Los Angeles. As long as there is a multi-billion-dollar appetite for illicit drugs, criminal groups will find a way to feed it.

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