From avocados to autos, Mexican businesses fear tough times with Trump

Thu Nov 10, 2016 3:44pm EST
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By Joanna Zuckerman Bernstein and Christine Murray

TIJUANA, Mexico/MEXICO CITY (Reuters) - From avocado orchards to border factories, Mexican exporters who have prospered under two decades of NAFTA face the prospect of an abrupt end to the boom if U.S. President-elect Donald Trump carries out his threats to ditch the free trade pact.

Trump says the North American Free Trade Agreement favors Mexico at the expense of U.S. workers and has vowed to either rewrite or withdraw from the deal, as well as build a giant border wall and possibly slap steep tariffs on imports.

Since the treaty took effect in 1994, Mexican exports to the United States have jumped six-fold to some $320 billion a year, transforming a once-closed economy into a hub for investment and a workshop for some of the world's biggest companies.

So business leaders there were stunned as Trump romped to victory on Tuesday night, upsetting the widespread expectation in Mexico that his candidacy would fade.

“(We) couldn’t believe what was unfolding before our eyes,” said Marcello Hinojosa, president of the Canacintra industrial chamber in Tijuana, the border city whose economy is based on a mix of U.S. tourism and assembly plants.

"Our main partner where we export is the United States. So if we take that away we’re going to have a lot of unemployment, we’re going to have a really big trade deficit," said Hinojosa, who runs a company that collects factory waste.

Further south, on the outskirts of the city of Leon, Rosendo Castillo, business director of leather exporter WYNY, whose customers include global retailers like Hugo Boss (BOSSn.DE: Quote) and Inditex's (ITX.MC: Quote) Zara unit, fretted about a potential blow to sales that are six times higher than when NAFTA began.

"It would really jeopardize the business" if the deal were rescinded, Castillo said, adding that WYNY, whose sales reached $120 million last year, was "not very successful" before NAFTA.   Continued...

A man arranges avocados at a market in Mexico City, Mexico, November 7, 2016. REUTERS/Edgard Garrido