News / Americas

Mexico Would Take Hit If US Debt Talks Fail

Craftswomen work on Christmas decorations in a workshop in the village of Chignahuapan in the state of Puebla, Mexico, November 26. 2007. Some of the spheres they produce are exported to the United States.
Craftswomen work on Christmas decorations in a workshop in the village of Chignahuapan in the state of Puebla, Mexico, November 26. 2007. Some of the spheres they produce are exported to the United States.
If negotiations aimed at preventing the United States from sliding over the so-called 'fiscal cliff' fail, the impact could be devastating to Mexico, America's third-largest trading partner.

The U.S. and its southern neighbor had $500 billion worth of trade in goods and services last year, mostly in electrical machinery, vehicles and crude oil. Mexico exported $15.8 billion worth of agricultural products to the United States in 201, making it the second-largest supplier of such goods.

If U.S. President Barack Obama and Republicans in Congress fail to compromise on a deficit-cutting package of revenue increases and spending cuts, it could spark a recession, which could mean layoffs for some Mexican workers.

"While Mexico is doing relatively well economically, the country would take a hit if debt talks fail," said Eduardo Garcia, with the Mexican financial website Sentido Común.

"Mexico's economy would suffer quite a bit if the U.S. fails to reach an agreement and these automatic fiscal measures go into effect because [Mexico] is so integrated into the U.S. economy," he said. Thirty percent of the Mexican economy is export-based and the U.S. consumes 80 percent of those products, he added.

In Washington Thursday, the Speaker of the Republican-led U.S. House of Representatives, John Boehner, accused President Obama of risking the "fiscal cliff" by stubbornly resisting spending cuts.

Republicans still are not budging on Mr. Obama's demands for higher tax rates on income above $250,000 a year, despite the president's election victory and opinion polls showing support for the idea.

The U.S. president has argued Republicans must accept higher tax rates on the wealthiest as part of any deal in order to avoid rates rising on 98 percent of Americans.

Without an agreement, tax hikes and spending reductions will begin taking effect in early January, steps that economists warn could renew the recession.

The Mexican economy contracted more than 6 percent during the 2008-09 U.S. financial crisis. While Garcia does not foresee such a large problem this time, he said the impact of any U.S. austerity measures would likely be immediate.

"Economies now react very quickly to these fiscal policies that are implemented," Garcia said. "So there's no doubt that as soon as it happens Mexico will start feeling the pain and the Mexican government will probably have to implement a few extraordinary programs to contain the blow," he said.

Mark Snowiss

Mark Snowiss is a Washington D.C.-based multimedia reporter.  He has written and edited for various media outlets including Pacifica and NPR affiliates in Los Angeles. Follow him on Twitter @msnowiss and on Google Plus

You May Like

Arrested Football Officials Come Mainly From the Americas

US Justice Department alleges defendants participated in 24-year scheme to enrich themselves through corruption of international soccer More

Video Kenyans Lament Al-Shabab's Recruitment of Youths

VOA travels to Isiolo, where residents share their fears, struggles to get loved ones back from Somalia-based militant group More

This US Epidemic Keeps Getting Worse

One in 4 Americans suffers from this condition More

This forum has been closed.
Comment Sorting
Comments
     
by: mobilebay from: Texas
December 21, 2012 8:31 AM
I doubt that Mexico will ever have to worry. This, and several past administrations, have seen to it that Mexico is taken care of no matter what the situation is with their own people. US taxpayers must pay for the upkeep of illegal aliens from that corrupt, third world country who laughs at our laws. They disregard our immigration laws and believe they are "entitled" to all rights as "undocumented Americans."

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensionsi
X
May 26, 2015 11:11 PM
When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.

VOA Blogs

More Americas News

Multimedia World Reacts to FIFA Indictments

While some applaud corruption charges, Russia calls on 'Washington to stop attempts to make justice far beyond its borders'
More

UN: World Hunger Declines, But More Effort Needed

Report finds large progress in some parts of Africa, but notes that sub-Saharan Africa still has the highest prevalence of undernourishment in the world
More

Maduro Rules Out Dollarizing Venezuela's Economy

Businesses struggle to obtain dollars through current currency system, leaving them unable to import raw materials or replacement parts
More

Video Galapagos Volcano Eruption Threatens Pink Iguanas

Nearly 1.8 kilometer-high Wolf volcano on Isabela Island is home to world's only population of pink iguanas, as well as variety of plants, animals
More

Video Extreme Weather Wreaks Havoc in Texas, Mexico

More than 1,000 homes damaged or destroyed in Texas, thousands of residents displaced; Tornado cleanup continues near Mexico border
More

Colombia's FARC Says End of Ceasefire a 'Step Back' in Peace Talks

Speaking from Havana, Cuba, where talks have been taking place for two and a half years, FARC Marxist leadership says peace would be unattainable if offensives intensify
More