The relationship between President Trump and Mexican President Peña Nieto has become strained in the past week.

MEXICO CITY  Mexico won’t tolerate more than a 10 percent duty on its textile and apparel exports to the U.S., top industry executives said, adding that the country also will fight any move by President-elect Donald Trump to renegotiate the North American Free Trade Agreement.

Trump has threatened to remove the U.S. from NAFTA if Mexico and Canada refuse to negotiate changes that could include a 35 percent duty on Mexican goods, potentially reversing a fivefold surge in clothing shipments from Mexican maquilas. These companies have already been battered by low-cost competition from China, Vietnam and Central America.

“I don’t think it will be more than 5 to 10 percent,” said Gustavo Bojalil, who leads top trade lobby Canaive’s chapter in Puebla State, home to factories producing apparel for VF Corp, Polo Ralph Lauren and most recently, Spain’s Zara, when asked what kind of tariff Mexico could feasibly handle. “I don’t think any market [speaking of Mexico, the U.S. and Canada] would withstand more than that. Twenty to 35 percent would be terrible as companies will pass the extra tariff costs to consumers.”

Arturo Vivanco, president of Canaive’s chapter in Jalisco State, home to “Mexico’s fashion capital” Guadalajara, said the lobby’s management is working to assess the damage any imposition of tariffs by the new Trump administration could bring. However, he said the lobby is willing to fight hard to ensure the vital industry isn’t severely harmed.

“We can’t forget our rights [under NAFTA] and we will fight for them,” Vivanco said, adding that Mexico could slap on retaliatory tariffs. In fact, PRD party Sen. Armando Rios Peter has called for a retaliation law to seize American assets in Mexico if things get out of hand.

For Mexico, seen as a big loser in Trump’s antiglobalization drive, the stakes are huge. The country depends on bilateral trade with the U.S., estimated at $1 million a minute. Nervousness over Trump’s proposals have clobbered the peso and prompted Moody’s to downgrade its 2017 GDP estimate for the country to 1.9 percent from 2.5 percent.

Vivanco said Canaive doesn’t have a master plan to counter Trump’s proposals, adding that executives are still waiting to see if his campaign rhetoric translates into actual presidential policies.

“He talks a lot and is confusing everybody but already he has retracted by saying he will only expel illegals with criminal records. So right now we are just doing a general assessment of the impact,” Vivanco said.

He echoed views that Trump’s NAFTA plan may not be as drastic as originally envisaged while the U.S. Congress, albeit Republican dominated, would probably oppose his threat to terminate NAFTA and introduce tariffs hurting North American trade.

“We know the U.S. is not auto-sufficient because of its expensive labor costs and a president is not the absolute authority,” Vivanco continued.

He added Trump’s Mexican views are lopsided. “He is mistaken when he says Mexico hurts the U.S. when China, Vietnam, Malaysia and the Philippines are doing more harm,” at least when it comes to stealing U.S. apparel jobs, he said.

Miguel Angel Andreu, a leading textiles consultant, agreed a 10 percent tariff would hurt the industry, adding that Mexico’s vast numbers of low and middle-class consumers will begin buying in the country’s “tianguis” or flea markets.

If it comes to it, “Canaive is going to take the view that it can’t stand even a 5 percent tariff, but the government will take the position that we have to be friends and have good relations with the U.S.,” Andreu surmised. “Unfortunately, they will probably cede a lot. It’s not a government that supports our industry.”

Andreu noted Mexico is “just another token in the U.S.’ sourcing game involving 25 top country suppliers. If Mexico gets expensive, they will just move the other tokens.”

Mexico sent $4.5 billion worth of clothing and textiles to the U.S. last year — $3.5 billion of apparel and $1 billion of textiles, according to Canaive data. Based on that figure, a 35 percent duty — which would match that of the pre-NAFTA days — would undermine $1.6 billion of exports annually while 10 percent could hit $450 million.

Last year, the U.S. sent $6.5 billion of apparel and textiles to Mexico — $4 billion was fabric and $1.2 billion apparel parts, according to Canaive’s general manager José Manuel Martinez, who emphasized Trump’s populist agenda will hurt the U.S. more than Mexico.

That was also the message Tuesday when former Mexican NAFTA negotiator Jaime Serra Puche raised headlines by warning the U.S. would “shoot itself and the region in the foot” if it rewrites the accord inked in 1994, noting that integration and joint manufacturing have spurred $1.6 billion of daily trade, with the U.S. reportedly sending $236 billion in 2015 and Mexico $320 billion.

Trump could bring some good things to Mexico, at least in the form of a wake-up call to make itself less reliant on the U.S. and forge trade bridges with Latin America, Europe and Asia, said Juan Antonio Barragán, a lawyer with Intrade consultancy in Mexico City.

“It’s not so much about a 10, 15 or 20 percent tariff,” Barragán said. “Any tariff is going to hurt Mexico and consumers in all the partner countries because apparel is a very competitive and sensitive sector and this is a tariff that impacts prices directly. It’s not a value-added tax.

“If Trump forces Mexico, for the first time in history, to enact a real industrial and commercial policy to cut our U.S. dependence, take us out of our comfort zone and develop trade with other countries, this might be the right time because the world is changing,” Barragán said.

“We don’t know how to export. Our government has not developed a policy to let us exploit all commercial relations with the world, to understand the logistical challenges, the supply chain costs and opportunities,” he said.

Bojalil, who sells uniforms and athleticwear to Wal-Mart Stores Inc.’s U.S. suppliers, said the country has a great opportunity to sell apparel to the Pacific Alliance comprising Mexico, Colombia, Peru and Chile as well as with Spain, where efforts are underway to strike deeper alliances with companies like apparel giants Inditex and Mango.

“There are many niches that can be explored, especially in Europe and Latin America but we need to change the way we are treating our customers; we have to be more formal and dependable,” Bojalil concluded, adding that Zara owner Inditex recently brought up such concerns when negotiating a contract to manufacture clothing in Puebla’s Tehuantepec apparel hub.

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