Dealing With Trump: Four Strategies for Latin America
Since about 9 p.m. New York time on Nov. 8, when Florida, Ohio and Pennsylvania were all bathed in red on TV electoral maps, Latin American politicians and executives have been frantically calling friends and contacts to ask: “How are we going to work with Donald J. Trump?”
There’s no foolproof answer, of course, especially for him. But based on our own good-faith efforts to interpret Trump’s statements and those of his appointees, while sifting through the rumor mills in Washington, Mexico City, Wall Street and beyond, here are four suggested strategies for how Latin America can try to work with the new administration starting Jan. 20:
1. Remember: “Elections have consequences.”
This was Barack Obama’s warning to Republicans in 2009 that he had won a resounding popular mandate, enjoyed majorities in Congress and would act accordingly to implement his agenda, opposition be damned. Expect Trump to adopt a similar posture early in his term, especially on the hot-button issues in Latin America that helped bring him to power.
Above all, that means Mexico – specifically, building a new border wall and renegotiating or tearing up NAFTA. Persistent speculation in Washington, Mexico City and elsewhere that Trump might back off either policy – whether in the face of skeptical members of his Cabinet, or financial realities – seems like wishful thinking. Like it or not, Trump supporters voted for an America that is more closed to trade and immigration, and to the world generally. A transactional “dealmaker” like Trump will not ditch the people who brought him to the dance – especially on one of the top five issues that defined his candidacy.
The most poignant quote I’ve read about Trump’s foreign policy philosophy (yes, he has one) did not come from a tweet or even from the president-elect himself. Rather, it was his senior adviser Steve Bannon, who said: “The globalists gutted the American working class and created a new middle class in Asia.” This criticism, which has a ring of truth even to many of us who believe in trade, means the administration will be unapologetically focused on what it sees as the best ways to create jobs at home.
In terms of strategy, that means Latin American governments and companies would be unwise to dig in and act like the status quo is still on the table on issues like trade. America will become more protectionist. Supply chains will be disrupted. NAFTA will fundamentally change. The question is to what degree – and that is where there is (some) room to negotiate, educate, cajole and seduce. Not on the fundamental principle itself – that battle was lost, at least for the next four years, in the form of 306 electoral votes on Nov. 8.
2. Don’t panic.
For Latin American countries not named Mexico, Cuba or Venezuela, they can take some solace in the fact they are largely terra incognita to the president-elect. It seems fair to say Trump has given as much thought to Brazil or Chile as, say, Cambodia or Croatia. That means they have huge latitude to build whatever relationship they want.
This may prove true not only of Trump, but his Latin America-facing staff as well. We don’t yet know who will hold those jobs at the State Department and National Security Council, but many of the names circulating seem to be “Cuba people,” for whom the relationship with Havana is their primary expertise and focus. This will spell bad news for the Obama administration’s policy since 2014 of opening to Raúl Castro’s regime, and it probably means a more aggressive U.S. approach to the crisis in Venezuela. But it could translate into a largely blank slate for almost everybody else.
Given this opportunity, Latin American governments may do well to engage as a group on specific issues – such as energy or security – as opposed to a “pure” bilateral basis, which may not be a priority for the new administration. Another perfectly valid approach would be to sit back, stay silent, watch carefully and enjoy not being in the spotlight in early 2017.
Even in the case of Mexico, we’ve been here before – kind of. Obama deported more people than any U.S. president ever, and of course a barrier already exists across large stretches of the border. On the economic side, Richard Nixon briefly imposed a 10 percent tariff on imports to the United States in 1971, a move that damaged Mexico’s economy among others. The point here is not that everything will be OK – Mexico is much more integrated with the U.S. now, and it could suffer a recession in 2017 as a result of Trump’s policies. But taking the long view reminds us that over time the pendulum does swing in areas like protectionism and trade, and what may seem irreversible hardly ever is.
3. OK, panic a little bit.
The risk of a damaging global trade war, widespread social unrest in the United States, or a “hot” conflict in the South China Sea, Iran or the Korean peninsula may all be higher as of Jan. 20. Most of Latin America is not at the epicenter of these dangers – but it’s not immune, either.
During the campaign, many regional leaders expressed faith in public and in private that U.S. institutions would ultimately hold Trump’s ambitions in check. But we’ve never seen a leader quite like him in America before – on the other hand, Latin America has. Unpredictable personal reactions may drive U.S. policy to an unprecedented extent.
Based on Trump’s behavior to date, it’s likely foreign countries and their leaders will be labeled as friends or enemies, with not a whole lot of nuance in between. That means, for example, that if the other Pacific Alliance countries express solidarity with Mexico on trade and immigration, they may be lumped into the hostile group on other issues across the board. Some degree of this may be inevitable – foreign leaders will not abandon their principles or their relationships. But opposing or even critiquing Trump will carry unpredictable consequences, and not just on Twitter. The good news is that consignment to the “bad” group apparently does not mean people stay there forever – see Paul Ryan, Ted Cruz and Carrier, among others.
Separating these real risks from partisan hysteria will be exceedingly difficult over the next four years. Traditional media and pundits have been wrong about Trump again and again – I’m still trying to figure out who and what to read in this new world. It’s notable that many CEOs, stock traders and bankers seem to be optimistic about what deregulation and tax cuts under Trump will do not just for the U.S. economy, but the world. But they may not be thinking holistically enough either – What will happen to Trump’s agenda by, say, July if his popularity remains low and the economy has not yet kicked into a higher gear?
4. Focus on what you can control.
Or, as Angela Merkel said this week in response to Trump: “We have our fate in our own hands.”
Mexico may simply decide that it cannot work with this administration, and return to the tense or even hostile bilateral ties that often prevailed prior to the 1980s. Meanwhile, a more insular United States may push Latin American countries to seek greater trade with each other. That could mean a deepening of the Mercosur trade bloc, for example – or an eventual deal between Mercosur and the Pacific Alliance. The latter option was floated publicly following a December meeting between Argentine President Mauricio Macri and Chile’s President Michelle Bachelet. Meanwhile, Brazil’s political establishment is currently thinking hard about how and whether to increase engagement with China as an alternate strategic partner to Washington. That is not a panacea, of course. But other countries are asking similar questions.
Mexican billionaire Carlos Slim has suggested that his country should take advantage of this opportunity to put its own house in order. In truth, Mexico and other Latin American countries do not need any prodding from Trump to do so. But it’s a reminder that this is shaping up as an era where many countries will be focused inward. For better or for worse. At least for a time.