A recent article in the New York Times (here) suggests that the Trump II Administration Trade Threats to both Canada and Mexico might bring the two countries closer together. It's hard to imagine Geopolitical Linkages between Canada and Mexico without the US. Mexico has strong cultural and economic relations with the Southwestern US and Canada has strong culture and economic relationships with the Eastern US and Midwest. There are strong inertial forces that will keep the Free Trade Agreements between the three countries moving forward well beyond the limited and inconsistent influence of the Trump II Administration.
The results presented below also suggest (not unexpectedly) that President Trump is tinkering with a system that he does not understand.
In this post, I will put the Growth Components (CA1, MX1, and US1) of the three countries (CA, MX, US) together in a systems model and see what shape the future dynamics might take.** The first question would be which model would be best (from an AIC perspective), the two country model (CA1, MX1) or the three country model (CA1, MX1, US1)? The AICs for the models are presented in the Notes below. From the AIC perspective, the three-country World-System linkage model is best.
But, let me clarify these results. I assume that politicians follow a BAU strategy: "our country is able to make it's own decisions without regard for other countries or the World System". The reality is, however, that each country is part of the World-System, whether they like it or not and whether they do or do not take into account World-System forces. The BAU results above suggest that CA and MX might reasonably consider going it alone together. The history of US, Canada and Mexico Free Trade Agreements suggest that the countries understand the importance of the US as Hegemonic Leader of the World-System. Strong inertial forces will keep the three countries trading with each other long past the Trump II Administration. Inertia does not mean that there are not tensions and contradictions in the system!
The problem with forecasts from the WS-linkage model (above) is that each country will face a possible growth-and-collapse, Limits-to-Growth future. The US will peak a little later (2050) than CA or MX (2025). So, right out of the gate, World System linkage will seem like a bad idea to growth-obsessed politicians. From the standpoint of Environmental Damage from growth, Degrowth would be a positive outcome. So my assumption is that politicians will turn away from a Limits-to-Growth future and focus on a BAU strategy such as NAFTA or the USMCA (the Trump I version of NAFTA).
If each country (MX, CA, US) focuses on business-as-usual and their existing linkages (which I think is very likely after Trump), each country experiences unlimited exponential growth well after 2150 driven by the US, which is the unstable part of the system (you can experiment with the MX_CA_US model using the code provided here). So at least unlimited growth was the vision prior to the Trump II Administration.
I have suggested here that the Trump II Administration is essentially taking the US on a Random Walk. If Trump was successful, the result could be a steady state (well after 2150) for all three countries.
In the short-run (year-to-year), the Mexican Economy is also a Random Walk (here). Also setting the Mexican Economy to a Random walk (graphic above) destabilizes the system and pushes the US into collapse mode. President Trump has to be careful with his RW-policy-approach because it can also destabilize the system.
Notes
** More information about how the dynamic component state space models can be found in the Boiler Plate.
The AICs are: (CA1, MX1 = [104 > AIC=121.6, 137.5]) and (CA1, MX1, US1 = [112.5 > AIC=138.5 > 163]) for the Business-as-Usual Models (BAU) and (CA1, MX1 = [58.03 > AIC=101.6 > 134.2]) and (CA1, MX1, US1 = [ 51.14 < AIC=94.59 < 132.4]) for the World System (WS) input model (smaller is better for the AIC).
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