US-Mexico trade war could hit Mexico economy, spur migration

FILE - In this Aug. 31, 2016 file photo, Republican presidential nominee Donald Trump walks with Mexico President Enrique Pena Nieto at the end of their joint statement at Los Pinos, the presidential official residence, in Mexico City. President Donald Trump and Mexican President Enrique Pena Nieto spoke for an hour by phone Friday Jan. 27, 2017 amid rising tensions over the U.S. leader's plans for a southern border wall, administration officials said.(AP Photo/Dario Lopez-Mills, File) (The Associated Press)

MEXICO CITY – If President Donald Trump makes good on threats to gut NAFTA and impose stiff tariffs on Mexican goods, economists say he risks a trade war that could lead to the very thing he is hoping to avoid — a huge surge in Mexican migration to the United States.

The result would be catastrophe for the Mexican economy: Recession. A dramatic weakening of the peso, even below the historic lows it has already set amid Trump's bellicose rhetoric. Soaring inflation, interest rates and unemployment.

"Mexico is smaller than the U.S. and can be harmed by conflict more than the U.S. would be," said Adam Posen, president of the Peterson Institute for International Economics, a Washington think tank that supports free trade.