Currency Consequences

Talk of walling off Mexico, deporting illegals and ripping up NAFTA has, unsurprisingly, hit Mexico hard. Despite repeated increases in interest rates to defend the peso, one US dollar now buys 20.5 pesos, up from 18.3 right before the election, and 16.5 on 11/21/15. Now, importing Mexican manufactured goods like cars is much cheaper, hurting US manufacturing and employment. This is a painful example of the law of unintended consequences.