Mexico Could Benefit From Trump’s Protectionism, Citi CFO Saysby
Peso’s 13% slide since election makes exports more competitive
Citigroup’s Mexico unit is nation’s second-biggest bank
Mexico could benefit from President Donald Trump’s protectionist trade policies because a weaker peso will make the already resilient economy more competitive, Citigroup Inc.’s chief financial officer said.
“Mexico does have a lot of advantages, and those advantages as an economy would continue, no matter what would happen between trade with the U.S.,” John Gerspach said Thursday, responding to an analyst’s question on the firm’s quarterly conference call for fixed-income investors. “You still have an incredible labor advantage within Mexico. I think it gives them the chance to compete in the broader globe.”
The peso has slumped more than 13 percent against the dollar since Trump won the Nov. 8 election on a platform that included building a wall along the U.S. border with Mexico and imposing penalties on U.S. companies that move operations there. Mexico is Citigroup’s largest foreign market, and the New York-based company’s Citibanamex unit is the nation’s second-biggest bank, with almost 1,500 branches.
“A weakening peso would again give them even more of a competitive edge,” Gerspach said. “So we still think there is a lot to like about Mexico.”
Tensions between the two nations deepened when Trump blasted Mexican President Enrique Pena Nieto for saying his country would refuse to pay for the planned border barrier. Pena Nieto said Thursday he won’t meet with Trump next week as planned. The friction has led many analysts to question prospects for revenue and profit for Citigroup’s Mexico business.