“The final outcome is unknown, but the risks to the Mexican economy from renegotiation appear to have diminished recently,” according to Fitch. “As recently as April, President Trump said he was still considering withdrawal from NAFTA, and there is still scope for unanticipated changes in the administration’s trade policy. But objectives published by the US Trade Representative last month, while reiterating the desire to reduce the US trade deficit with NAFTA countries, included maintaining mutual tariff-free access for industrial goods as a priority aim. They also suggest that the US is less likely to try to use rules of origin to restrict Mexican access to the US market.”
Related: Formerly Dumped on Trump, Mexico ETF Now a Darling
The peso is an important part of the Mexico investment thesis because exports account for over a third of GDP in Latin America’s second-largest economy. So are oil prices because Mexico is one of the largest non-OPEC producers in Latin America.
For more information on the Mexican markets, visit our Mexico category.