Latino businesses in Arizona watching Mexico peso closely
Nov 10, 2016, 8:30 AM
FILE - In this Tuesday, Nov. 8, 2016, file photo, Republican presidential candidate Donald Trump pumps his fist as he arrives to speak at a campaign rally in Grand Rapids, Mich. President-elect Donald Trump inherits a much sturdier economy than the one Barack Obama took into his second term four years ago. Yet economic growth remains stubbornly sluggish and is expected to remain so. (AP Photo/Evan Vucci, File)
(AP Photo/Evan Vucci, File)
PHOENIX, Ariz. – In the months leading to the Presidential election, the value of the Mexican peso suffered, but it wasn’t until Donald Trump was announced as the next president-elect Tuesday that it took a big hit.
The peso fell eight percent Wednesday to roughly 20 pesos to the dollar, its lowest value against the dollar in history.
“We have an important economic relationship with Mexico that cannot be taken for granted” said James Garcia, spokesperson for the Arizona Hispanic Chamber of Commerce. The devaluation of the peso in the aftermath of the election points to a ‘clear uncertainty’ of what will happen in a Trump Presidency, he added.
That uncertainty has business leaders, particularly Latinos in Arizona keeping a close eye on the months to follow Nov. 8. For example, a lingering question is what will Trump decide to do about the North American Free Trade Agreement (NAFTA)?
Trump had threatened to exit the more than 2-decade-old NAFTA.
“While there are some segments of that trade agreement that people feel…could be improved,” explained Garcia, “as a nation, we’re better off (with an agreement).”
Trade between Mexico and Arizona reached $18 billion in 2015. Arizona Governor Doug Ducey described Mexico as “Arizona’s number one trade partner, times four,” he told KTAR in September.
Such relationship could impact businesses in Arizona, particularly those owned by Hispanics.
The number of Hispanic-owned businesses in the state soared 70 percent between 2007 and 2012. Latina-owned businesses tripled in Arizona between 2007 and 2015.
“We have an intimate relationship with the Mexican economy through our own economy,” Garcia said. He added that relationship needs to be cultivated, not only economically, but politically and culturally.
It’s not clear how long the Mexican peso could see its value so low, explained Richard Merritt, President of Elliott D. Pollack and Company. “It’s going to take a while to play things out….eventually some kind of trade agreement will be made” to appeal both parties, he said.
Despite global reaction to a Trump win Tuesday, Merritt doesn’t think there’s anything to worry about at this point when it comes to the stock market’s reaction.
“It really is a short term uncertainty in the market,” Merritt said. He believes once things shake out, everything would go back to normal.
Mexico’s president has reached out to Donald Trump and on twitter writes “Mexico and the US are friends, partners and allies that should continue to collaborate for competitiveness and the development of North America.”
México y EUA son amigos, socios y aliados que deben seguir colaborando por la competitividad y el desarrollo de América del Norte.
— Enrique Peña Nieto (@EPN) November 9, 2016
Meanwhile, Garcia warns that despite Arizona’s improved economy over the last few years, if a President Trump significantly changes or goes away with NAFTA, Arizona would run the risk of creating “a wall” between both regions that could hurt local businesses.
