For months the US, Canada, and Mexico’s negotiators have been trying to tie up loose ends and finally seal a new deal that would replace NAFTA. Monday morning, President Trump announced what seems to be a preliminary bilateral deal between Mexico and the US.
A big deal looking good with Mexico!
— Donald J. Trump (@realDonaldTrump) August 27, 2018
Little has been revealed as to what the “elegant” deal actually contains except the following comments made by President Trump:
- “Much simpler, much better for both countries.”
- “Something very special for our manufacturers and our farmers, of both countries and people that work for jobs.”
Mexican President Pena Nieto has also commented on the deal and state that both countries are hoping for the reincorporation of Canada into the talks.
He hablado con el Presidente @realDonaldTrump. México y Estados Unidos han alcanzado un entendimiento comercial. Deseamos la reincorporación de Canadá a las pláticas para lograr una exitosa negociación trilateral del TLCAN esta misma semana.
— Enrique Peña Nieto (@EPN) August 27, 2018
The Mexican infrastructure industry has already experienced some side-effects from the renegotiation, but until the full terms of the deal are announced, the impact is not fully measurable. A cloud of uncertainty has hovered over the industry since late 2017, but after the Presidential elections in July, the air is beginning to clear. Stock prices have maintained stability, national and international investors continue to invest and Mexico still has a great amount of potential to continue building its future.
Although the main buzz surrounds the tariffs on the automotive industry, prices of raw materials such as steel and aluminum have fluctuated. Yet the US Department of Trade announced in August that Mexican steel exports to the US increased 25 percent despite new tariffs.
In February 2018, Moody’s Investors Service announced that the construction sector would be the most effected by the renegotiation of NAFTA. Analysts explain that apart from the delay and cancelation of projects due to uncertainty, the industrial and residential sectors have taking the hardest blows.
This new deal could definitely impact prices but right now the most pressing matter is what will happen to the infrastructure projects established by Peña Nieto’s administration (including NAIM and the Mexico-Toluca Interurban Train) and the new plans that AMLO has for the next six years.
Last week the federal government canceled eight of 266 of the current administration’s commitments due to a lack of budget and legal issues with local governments. Some of the projects include:
- Santa María Dam in Rosarito, Sinaloa
- El Salto Dam in Amecameca, State of Mexico
- Maroma Dam in San Luis Potosi
- Tlaxcala Interior Port
- Cordova Convention Center in Veracruz
The key to the Mexican infrastructure industry’s success lays in continuity and transparency of existing and upcoming projects. Investors have already placed their bets on Mexico, and these two factors are crucial to maintain their trust and attract further investment in the sector.