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A Mexican Lesson Of 'All Eggs in one basket' For Us.

January 27th, 2017

One of the hardest lessons my colleagues and I learnt when we were running our small business was that it was a mistake to have one of your customers provide most of your income. This meant that we bent over backwards, sometimes to our own detriment, to ensure we kept their business.

Broekn EggsMexico is facing a similar kind of fate. Granted they do also export goods to the USA but it is their over reliance on the US trade that puts them in their current dilemma with President Trump mooting a 20% tax on Mexican goods – maybe even enough to pay for that wall!

I believe Donald Trump's policies are likely to make the USA more inward looking and isolationist – and as long as he stays away from THE button, it may be a good thing for the rest of the world particularly Africa.

The reliance on the US markets for many economies – though that maybe shifting somewhat to China in many African countries – is unhealthy. So many poorer countries will shun trading with neighbours and instead produce luxury goods for the US and European markets (see my old post Africa’s Continued Dependence on Europe). All of them could do well to spread their trade over several neighbours and do everything in their power to ensure that should one trading partner go 'rogue', the damage is limited.

Mexico is the largest economy in Central America – because of the trade with the USA maybe - and should have leveraged that to increase trade with her other neighbours. Right now, she is going to have to bend over backwards as much as her leader tries to stand his ground.