Diplomatic tensions between Peru and Mexico affect bilateral trade

Diplomatic tensions between Peru and Mexico are highlighted, and this could have a significant impact on bilateral trade. The conflict was intensified when Mexico refused to hand over the pro tempore presidency of the Pacific Alliance to Peru. This dispute has been dragging on since December, when Mexican President Andrés Manuel López Obrador refused to recognize Dina Boluarte as head of state. In response, the Peruvian Congress declared AMLO persona non grata.

Juan Carlos Mathews, Peru’s Minister of Foreign Trade and Tourism (Mincetur), expressed concern about AMLO’s intentions to cut trade ties, calling them “suicidal.” He warned of possible violations of bilateral treaties and WTO rules that could arise from this conflict.

Tensions between the two countries have direct implications for trade. Peru exported US$845 million in goods to Mexico in 2022, with annual growth of 53%. Major exports included fruit, copper, palm oil and zinc. In turn, Mexico exported US$1.9 billion to Peru, with emphasis on copper, vehicles and computer technology.

In the first quarter of 2023, bilateral trade recorded a contraction of 1% compared to the previous year. While Peruvian exports to Mexico grew 11%, Mexican shipments to Peru decreased 8%. Considering the greater added value and high level of industrialization of Mexican products, Mexico could suffer a greater impact than Peru, as selling these products is more challenging than selling raw materials.

It is important to highlight that Peru runs the risk of losing a promising and growing destination for its exports, with which it has already established customs agreements. This situation requires attention and diplomatic negotiations to mitigate the negative impacts on trade between the two countries.