US elections and trade war with China raise alarm: Franklin Templeton

“The fact that this is going so well could end up being a problem, what worries us most is not the elections in Mexico, but the elections in the United States, because here there are many things that come from China that are transformed and then, under under the treaty (T-MEC), are sent to the United States,” said Jorge Marmolejo, vice president and portfolio manager of Franklin Templeton Mexico.

He highlighted that China’s appetite for Mexico is reflected in the investment announcements made known by the Ministry of Economy; Last year it was the second largest investor, and from January to March of this year, the Asian country is fourth place.

“This will undoubtedly continue, but this is already raising eyebrows, there are several comments,” Marmolejo commented.

President Joe Biden is already a little ahead of Donald Trump with aggressiveness towards China. Yesterday he announced the increase of tariffs on Chinese products valued at 18 billion dollars such as electric vehicles, batteries, steel and critical minerals.

“Probably the ones who continue will be us (Mexico), there is going to be something there, it may just be rhetoric or it may be a commercial issue and what worries us is that we have several pending issues with the United States, such as the energy issue, rules of origin, and other things that have been stopped because the enemy is China and we are allies, but if they are using us as a stop to go to the United States, we are going to see it in the elections.

Regarding the elections in Mexico, he pointed out that they do not observe major risks, since the results are already moderately discounted, due to a scenario in which it is highly probable that the winner will be Claudia Sheinbaum from Morena.

The two scenarios that worry are: that Morena wins with a full team, that will surely upset the markets; and the second, which is less likely, is that Xóchitl wins with a small advantage, because there we would begin to see a direct attack on the institutions.