Bank of America bets on long-term growth in Mexico due to ‘nearshoring’, despite Trump tariff threat

8:11 am Thursday, November 28th, 2024

By Aida Pelaez-Fernandez

MEXICO CITY (Reuters) – Bank of America is bullish on its future in Mexico, according to the head of the bank’s unit in the country, and stands to benefit from the so-called “nearshoring” trend even after threats of tariffs on exports to the U.S. by President-elect Donald Trump.

WHY IT’S IMPORTANT

Trump’s threat earlier this week to slap tariffs on Mexico and Canada has roiled markets and clouded the horizon for investments by multinational firms into the region.

The three countries are part of a regional trade agreement known as the USMCA, which is up for review in 2026. The neighboring nations, particularly the U.S. and Mexico, are heavily reliant on imports and exports from the other country.

KEY QUOTES

“It will be very difficult for uncertainties, either internal or external effects to alter or modify the opportunities that we see in Mexico,” said Bank of America’s Mexico head, Emilio Romano, in a press briefing.

“We believe that the nearshoring or friendshoring phenomenon will not be reversed,” he said, referring to the trend in which large multinationals have moved operations to Latin America’s No. 2 economy.

“Mexico will not deviate from this North American economic integration, there is no turning back.”

BY THE NUMBERS

Bank of America expects to double its revenue and client volume in Mexico within the next five years, Romano said.

The firm’s client base should grow from 400 to 800, according to the executive. In Mexico, BofA offers institutional banking services and does not serve individual clients.

Romano declined to provide more detail about the bank’s revenue outlook.

WHAT’S NEXT

Trump’s tariff threats will continue to generate market volatility, Romano said. However, he cautioned that they were likely a bargaining strategy by Trump to kick off trade negotiates and unlikely to actually be imposed.

(Reporting by Aida Pelaez-Fernandez; Editing by Anthony Esposito, Kylie Madry and Michael Perry)