Victory by frontrunner Donald Trump in the United States presidential election would would be disastrous for Latin American-US relations if it led to more punitive rules on trade, immigration and the work of development banks in the region, leading experts have warned.
US elections have always been crucial events for Latin American countries, but interest in the 2016 race to replace Barack Obama towers above all others in recent memory.
The insurgent campaign for the the Republican Party nomination by Trump, a billionaire businessman, has shaped the debate, thanks to his hardline positions on economic relations, immigration and trade.
His principal rival for the Republican nomination, Texas senator Ted Cruz, has also taken a hardline position on immigration. The candidates for the Democratic nomination, former secretary of state Hillary Clinton and Vermont senator Bernie Sanders, have not espoused anti-immigrant polices, but both Democrats and Republicans are critical of free trade agreements, especially the Trans-Pacific Partnership the US and 11 other countries signed in February.
While the nominating process in the two parties will not be settled until July, policy positions taking shape so far are creating tense relations between the US and the other countries in the hemisphere regardless of who wins — and would enter unknown territory if Trump were to win.
Michael Shifter, president of the Inter-American Dialogue, said that a Trump victory would be disastrous for Latin American-US relations. “Beyond policies, all of the mean-spirited rhetoric will make relations with Latin America difficult. Even if he were to change, the damage has been done and there would never be a trusting relationship with Latin America,” he said.
Douglas Holtz-Eakin, president of American Action Forum, a conservative policy institute, highlighted the “strong anti-immigrant and anti-trade expression, essentially looking inward economically and militarily”. “I think the stakes are quite high, not just with Latin America, but for emerging markets in general.”
Hotlz-Eakin said a Trump presidency was likely to mean a switch in the US’s position regarding the International Monetary Fund and development banks such as the Inter-American Development Bank, which have played a critical role in the region. “I can’t imagine that he would look kindly on international agencies,” he said. The US is a significant shareholder in all international financial institutions.
MEXICO IN THE FIRING LINE
America’s relationship with Mexico would obviously take the hardest hit. Trump has pledged to build a wall along the border between the two countries and prevent immigrants without documentation from wiring money home unless Mexico agreed to pay for its construction.
“Mexico’s big problem is Trump,” said Chris Palmer, founder of London-based Benson Avenue Capital. “This mentality is really damaging to the economic model that Mexico is striving so hard to create. They look north of border and they see Trump’s denouncements of trade agreements [like Nafta] and that many Americans agree with him. It makes policymakers wonder if they bought into that [US-focused development model] too much.”
A report from Nomura this week looked at the impact of Trump’s positions, stating that Mexico and the US had substantial economic ties and “Trump’s willingness to threaten to disrupt those ties is a risk that investors should at least be aware of”.