This article is part of a series published in cooperation with the Mexican magazine Letras Libres.
A significant amount of President-elect Donald Trump’s campaign for president focused on Mexico. This was, after all, a campaign that kicked off with an ugly description of Mexican immigrants as criminals and rapists and made the construction of a wall along the U.S.–Mexico border and withdrawal from the North American Free Trade Agreement two of its signature issues.
Now that he has won the presidency, there will be pressure on him to follow through on his campaign pledges. He should reconsider. The United States could solve many of its problems through greater integration with its southern neighbor—a middle-income country with 120 million young people, an unquenchable thirst for American consumer products, and millions of workers eager to produce for its companies. In short, America needs Mexico to address the very economic ills that created the public frustration that allowed Trump to triumph.
America has benefitted for decades from having the wind at its back, but now it could come up against considerable headwind. Americans have lived for far too long beyond their means. To make up for income that was insufficient to support their lifestyle, even with two salaries per family, American households have been racking up debt.
Consider the demographics. The U.S. population grew most dramatically during the baby boom following World War II. And yet, while the roughly 80 million baby boomers earned record incomes and drove unprecedented economic growth, almost two-thirds of them do not have enough savings to retire today. In this context, the American economy faces a twofold challenge.
First, how can the U.S. increase its productivity to make up for the dramatic decline in the labor market? According to the Bureau of Labor Statistics, 94.7 million Americans were unemployed as of this past May. A mere 62.6 percent of working-age Americans are part of the workforce, the lowest figure in 38 years.
Second, how can the U.S. generate the necessary wealth to support an aging population? An influx of young immigrants would act as a vehicle for rejuvenating its population pyramid. The United States should learn from the mistakes of Japan’s demographic model, a country with marginal immigration and a fairly homogenous populace, which will have lost one-third of its total population by 2060. For decades, Japan has shunned mass immigration, resulting in an aging population, which is rapidly declining. As this continues to happen, young people in Japan have to pick up the tab for their elders, who are no longer able to support themselves. How can the United States fulfill the enormous obligations amassed through its generous entitlement programs with a declining population?
Moreover, in a country with high levels of household debt, how will Trump tell his fellow Americans that their purchasing power will be severely reduced due to the increased tariffs that the rest of the world will impose in response to the president-elect’s threat of isolationism? The U.S. has profited from cheap labor provided by mass migration from countries, including Mexico. In the agricultural sector, for example, an ample supply of migrant workers has resulted in less expensive food in American grocery stores, and affordable domestic help has facilitated increasing numbers of American women entering the workforce. Today an American worker enjoys a flat-screen TV at a reasonable price thanks to Mexico’s assembly plants.
In the coming years the world economy will grow slightly, in the best-case scenario, and in the worst it will confront a banking crisis in Europe or credit crisis in China. America’s only option to grow is to win over a greater percentage of the global market with its exports. How will it achieve this without strengthening the regional economic integration achieved over the past 20 years with Mexico and Canada thanks to NAFTA?
The rhetoric Trump embraced reminds us of laws such as the Smoot Hawley Act of 1930, which raised tariffs on thousands of imported goods to force Americans to buy products “Made in the USA.” This measure set off a domino effect of similar protectionist measures against American exports around the world. Such isolationism led to a decade of global economic depression and contributed to the outbreak of a world war. America has already been there and done that.
Like it or not, Mexicans and Americans have become more interdependent, and reversing the process will be highly damaging to both. Around 17 million Mexican tourists visit the United States every year. Mexico is the primary destination for exports from California, Texas, New Mexico, and Arizona, and the second destination for 25 other states. Mexico buys 16 percent of all American exports. Forty percent of all Mexican exports have American-made components. Six million American workers depend on exports to Mexico.
Trump has blamed NAFTA and immigration for depressing American wages. But he is wrong: Mexican production is not a substitute but a complement to American manufacturing. This is why factory output in the U.S. is at an all-time high, and more than 12 million workers are employed in manufacturing. Higher marginal labor costs will only accelerate outsourcing and automation of manufacturing processes.
Together, we have the most efficient energy in the world, an ideal combination of highly skilled workers and cheap labor, natural resources, and a powerful internal economy. The complex situation America faces calls for a pragmatism that has no place for nativism, racism, and simplistic solutions. Our integration is irreversible, and blaming free trade or immigration for economic changes brought upon by new technologies is historically dangerous. It’s better that we work together. It’s in our best interest.
