Trump’s trade policies will increase risks to global growth

The trade policies proposed by Donald Trump, the next president of the United States, such as the application of blanket tariffs on imports, are likely to be more disruptive, increase risks to global growth and could lead to retaliation from trading partners, warned the Moody’s rating agency.

In their analysis titled: Trump’s presidency will change tax, trade, climate and immigration policies, Moody’s analysts highlighted that protectionist measures could disrupt global supply chains and negatively affect sectors that depend on imported materials and goods, such as manufacturing, technology and retail.

In turn, the firm’s specialists stated that in a divided government scenario, Trump is likely to rely on executive orders to promote specific tariff, trade and immigration policies, and exert influence through cabinet appointments and government authority.

On the other hand, they mentioned that Trump is likely to pursue more aggressive immigration policies, including increasing deportations, building additional barriers at the border, stricter visa regulations and fewer asylum grants.

“While these policies aim to reduce unauthorized immigration and prioritize merit-based legal immigration, they could lead to labor shortages in sectors that rely heavily on immigrant labor, such as agriculture, trade retail, hospitality, construction and healthcare,” they detailed.

For its part, the Fitch rating agency reported that Donald Trump’s victory in the presidential elections of the United States of America could have multiple significant implications on the economic and financial stability of the Mexican states, especially those with economies strongly linked to trade, investment and remittances from the United States.

He warned that Trump’s foreign trade policy, with its protectionist approach, could affect Mexican states.

The revision of the Agreement between Mexico, the United States and Canada (T-MEC) could increase trade barriers, especially impacting states such as Baja California, Coahuila, Chihuahua, Nuevo León and Tamaulipas, which largely depend on exports to the United States. .

“An increase in tariffs and stricter import policies could reduce the competitiveness of Mexican products in the US market, reduce tax revenues derived from economic activity and affect payroll tax collection,” the rating agency indicated.

He said that the political and economic uncertainty generated by Trump’s victory could discourage Foreign Direct Investment, and in particular, the relocation of companies to Mexico.

Mexico City and states such as Baja California, Nuevo León and San Luis Potosí, which have attracted significant investment from the United States, could see a reduction in new investment projects if Trump’s policies focus on repatriating manufacturing production to their country.

“More restrictive fiscal and regulatory policies could also make investing in Mexico less attractive,” Fitch mentioned.

Regarding Trump’s stricter immigration policies, the firm commented that they could reduce the flow of remittances, affecting consumption and financial stability in these regions.

“A decrease in remittances could directly impact the internal demand and quality of life of families that depend on this income, affecting the fiscal capacity of states and increasing social spending due to the increase in demand for public services and social programs” , he stated.