I’ve just been on an extensive trip through Latin America, starting in Mexico and proceeding to Peru, Chile, Argentina and Brazil. Here, I offer a few highlights—including reasons for optimism.

Trade Relations Top of Mind in Mexico

The election of Donald Trump as president of the United States has caused Mexico some concern about its relationship with its neighbor to the north, particularly in the area of trade. President Trump’s stated objective to keep the US dollar’s value weak, in order to aid American companies reliant on exports, is of importance to countries heavily exporting to the United States. It will be interesting to see if he can accomplish this in light of further potential increases in US interest rates, which tend to boost the dollar.

The Trump administration’s policy actions will likely be of critical importance to Mexico, but we must not lose sight of the fact that US-Mexico trade is enormous and is important to both countries. The United States and Mexico are key trading partners, with two-way trade estimated at a total of more than US$580 billion in 2015.1 Trade in both directions is heavily geared toward machinery and manufactured goods. The automobile sector, including vehicles and parts, is Mexico’s top source of exports to the United States. The US auto industry is highly dependent on parts from Mexico, so trade can’t simply be shut down completely.

Mexico is Latin America’s top producer of vehicles, the seventh-largest vehicle producer worldwide, and has a number of free trade agreements with many other countries.2 So, in fact, the United States certainly isn’t Mexico’s only market.

Meanwhile, the United States’ largest export markets are Canada and Mexico, and agricultural products represent some US$18 billion exported to Mexico in 2015.3 In the context of total exports, that number is relatively small, but it’s also politically important. In general, we think fears about economic relations between the United States and Mexico completely breaking down are probably overblown.

That said, there is no question to us most emerging-market countries will need to evaluate their trade strategies in regard to the United States, but also in regard to trade relations broadly.