Tomohiro Kakihara, Center of Economic and Administrative Sciences, University of Guadalajara

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On Tuesday, March 21, 2017, 15:00–16:30, Seijo University’s Institute for Economic Studies co-hosted a mini-symposium, “The Globalization of Japanese Businesses, and Trumponomics: The Impact on the Mexican Economy,” as part of the university’s MEXT-supported Research Branding Program for Private Universities. During the event, Masahito Uchida (Faculty of Social Innovation, Seijo University) acted as coordinator, and I (Tomohiro Kakihara, Center of Economic and Administrative Sciences, University of Guadalajara) delivered a presentation.

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In my presentation, I spoke about the impacts of President Trump’s policies toward Mexico, which he floated following his inauguration in January 2017, and related these impacts to the globalization of Japanese businesses. Japanese enterprises, particularly those in the electronics industry, have been globalizing their business operations since the 1990s. I related this trend to Mexico’s efforts to attract foreign capital and the ingress of Japanese firms into the Mexican market.
I then described the recent surge in Japanese automakers’ investments in Mexico, focusing on the factors behind the formation of an industrial cluster in Bajío, a district in the Central Mexican Plateau. Next, I outlined four main approaches of the newly inaugurated Trump Administration’s policies toward Mexico: 1) the proposal to impose a levy on Mexican imports, 2) a new approach to immigration into the US, 3) the impact on the dollar-peso exchange rate, and 4) the possibility of a decline in the influence of Mexican manufacturing.
Mexico is heavily dependent on the US economically, relying on the US for more than 80% of its trade, and relying especially on direct American investment. As such, the country will be significantly affected if Trump makes good on his proposed Mexican policies. The US also depends on Mexico to some extent; around 40% of the goods that Mexico exports to the US market are made using American materials. Thus, Trump’s policies threaten to impact the US economy as well as the Mexican economy.
Since joining NAFTA, Mexico has achieved steady economic growth, underpinned by globalization. However, Trump’s policies threaten to negatively impact the flow of foreign capital into the country, particularly from the automotive industry—from which much of the investment has come in recent years. The automotive industry is the leading driver of Mexico’s economy at present. Given that this industry ultimately leads to localization, global trends have direct impacts on Mexico’s local communities. As such, this industry testifies to the intricate relationship between globalization and localization.
Following the presentation, a spirited discussion ensued. Attendees offered various views on the likelihood of NAFTA breaking up, the likelihood and potential outcome of a border tax, and the potential for offsetting the risk of price rises associated with exchange-rate fluctuations.