Washington DC: President Donald Trump threatened Friday to slap tariffs on all of the Chinese goods imported into the United States, ramping up the already tense trade relations with Beijing amid ongoing talks with Canada and the EU. His comments, which contradicted the more diplomatic remarks earlier Friday from his top economic adviser, sent the stock market plunging amid fears of the economic damage that could result from the multi-front trade war he pursues.

The United States already has punitive tariffs on $50 billion in Chinese goods in place and another $200 billion are “in the hopper” and “could take place very soon,” Trump said. But he told reporters traveling with him to Fargo, North Dakota that “behind that, there’s another $267 billion ready to go on short notice if I want.” That would cover virtually all the goods imported from the world’s second-largest economy.

“That totally changes the equation,” Trump said. White House economic adviser Larry Kudlow just hours before said talks with Beijing were continuing to try to defuse the conflict, and that he was hopeful that a solution could be found. And there have been more positive signs in talks with North American partners as well as with the European Union.

US Trade Representative Robert Lighthizer held another day of meetings with Canada’s Foreign Minister Chrystia Freeland on a rewrite of the North American Free Trade Agreement, after reaching a deal last week with Mexico. However, Freeland left Washington without a deal in hand and the schedule for any future talks was uncertain.

Lighthizer is due to meet on Monday in Brussels with EU Trade Commissioner Cecilia Malmstrom to resolve the dispute ignited when Trump imposed steep duties on all steel and aluminum imports. And Freeland is due to attend a Liberal Party meeting on Wednesday and Thursday prior to the opening of Parliament.

– China a ‘bigger problem’ –

“China, right now, is a far bigger problem,” Trump said. “I’m being strong on China because I have to be.” The deadline for public comment on the next wave of punitive taxes on $200 billion of annual imports from China expired Thursday, so Trump could impose the tariffs immediately.

He previously had threatened to hit 100 percent of imports from China if the country failed to address US concerns over theft of US technology and barriers to American goods and investments. Trump has had Beijing in his crosshairs since he took office and has applied increasing pressure to try to convince it to change its policies, allow more US imports and reduce the $335-billion US trade deficit with China.

China so far has retaliated dollar-for-dollar with tariffs of its own on US goods but since it imports less than $200 billion in goods a year from the United States, it has run out of room to match the punitive measures. But businesses warn there are other ways China can strike back, through regulations and other administrative means, or even through sales of its large holdings of US Treasury debt.The last effort at a negotiated solution came in late August with meetings between low-level officials, but nothing came of it. In Beijing, China’s Commerce Ministry said Thursday it was ready to retaliate.”If the US dogmatically implements any new tariff measures against China, China will have to take the necessary countermeasures,” commerce spokesman Gao Feng told reporters. Those steps include slapping tariffs on $60 billion of US imports, Gao said.- NAFTA talks 24/7 -Trump said talks with Canada to revise the 25-year-old NAFTA were “moving along” but again called the agreement “one of the worst trade deals in history.” “Canada has been ripping us off for a long time. Now, they’ve got to treat us fairly,” he said, and again threatened to impose duties on cars produced in Canada.Last week, Washington reached a new deal with Mexico and is pushing to sign a revamped NAFTA before December 1, when the next president takes over in Mexico City. Following meetings on Friday, Freeland told reporters the issues were “complicated” but that officials were working “really at this point 24/7.”However, she seemed to have a different position than Mexican Economy Minister Ildefonso Guajardo on the relationship between the NAFTA talks and the US steel and aluminum tariffs. Guajardo said Thursday it would be “very strange” to sign a new NAFTA “when this trade war is pending.””So the idea would be to table a solution to these trade aggressions before signing,” Guajardo said at a conference in Mexico City. But Freeland said on Thursday the metals tariffs and NAFTA talks “are entirely separate” – although she again called them “unjustified and illegal.”The NAFTA talks between Washington and Ottawa have been hung up over Canada’s insistence on retaining a dispute resolution mechanism in Chapter 19 and US objections over Ottawa’s tight controls over the dairy market.

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Upping the ante in his ongoing showdown with Mexico’s business elite, leading presidential candidate Andrés Manuel López Obrador accused billionaires German Larrea and Alberto Bailleres of being part of an alleged plot to prevent him from winning the country’s July 1 presidential election, the Mexican online site SinEmbargo.com has reported.

Lopez Obrador, who holds a double-digit lead in almost all polls, said Tuesday that mining tycoons Larrea and Bailleres, Mexico’s second and third richest people, plus cinema mogul Alejandro Ramírez, who is president of the Mexican Business Council, among other top businessmen, met last month with Ricardo Anaya, the pro-business PAN presidential candidate. He claimed that the purpose of the secret meeting was to discuss support for a “single candidacy” that could defeat López Obrador.

The usually reclusive Mexican Business Council, comprise of Mexico’s ten richest magnates, pushed back in an extraordinary ad in Mexican papers in which it accused López Obrador of “insulting and slandering” them. “It is concerning that someone who aspires to be President of Mexico insults those who do not share his ideas,” the group said on Thursday. “We condemn that a presidential candidate resorts to personal attacks and unfounded accusations.” The Council offered to talk with all political forces, but with “respect.”

At his daily press conference on Tuesday in Mexico City, Anaya denied that such a meeting took place “in the terms that López Obrador described,” a spokesperson for Anaya told me. “It’s false. What happens is that López Obrador is resorting again to his old conspiracy theories,” Anaya said, according to the audio of the press conference provided by the Anaya spokesperson.

Last Friday, Anaya told a meeting of bankers sponsored by Citibanamex, Citigroup’s Mexican unit, that he is open t

A “single candidacy” implies that José Antonio Meade, the PRI presidential candidate who has failed to connect with voters and is running a distant third, would withdraw in favor of Anaya. Meade has rejected outright the idea, pledging to stay in the campaign until the end.

The country’s private sector has been uneasy with many of López Obrador’s economic proposals and confrontational style. Last month, telecom tycoon Carlos Slim Helú called on López Obrador to reconsider his pledge to cancel a $13 billion airport project for Mexico City in which Slim’s companies are top investors.

A May 2 survey by the newspaper Reforma showed López Obrador with 48 percent support, an 18-point lead over second-place Ricardo Anaya and 31 points ahead of ruling party candidate José Antonio Meade.

o collaborating with the ruling PRI party to beat López Obrador, according to a video that Mexican magazine Proceso says it obtained from the Anaya campaign.

Read the daily news and you’d be forgiven for thinking US-Mexico relations are at a nadir. When it comes to some sectors, however, that isn’t the case. Jalisco State, on Mexico’s Pacific coast, has enjoyed an IT boom for several years. Now one of its leading tech scions tells Red Herring that Jalisco–and its capital city Guadalajara–are set to benefit from US President Trump’s nativist policies.

Anurag Kumar is CEO of iTexico, a software company that assists companies with mobile development via ‘nearshore outsourcing’–corporate lingo for using services in a nearby foreign nation. Its clients include top-line brands like Appcelerator, IBM and Microsoft.

iTexico employs over 140 people from its headquarters in Austin, Texas. It also has an office in Silicon Valley, but the vast majority of iTexico’s staff are based in Guadalajara. Kumar, a vastly experienced Indian businessman from Punjab, made his name at firms like Dell, Entreave and the Austin Business Board before co-founding iTexico in 2010. He flies to Guadalajara regularly. Since iTexico was conceived he has seen Guadalajara working to compound on several key advantages.

Low energy and labor costs have long drawn US companies south of the border. Mexico is the 11th largest economy in the world, with an economy worth $2.2tr. However its GDP per capita stands at just $18,900 compared to the US’ $57,300.

Jalisco’s tech industry took a lead almost half a century ago when IBM, Motorola and others began manufacturing semiconductors there. Engineering came soon after, and now software and IT services are providing a third wave of tech-led benefits to the local economy.

In recent years the North American Free Trade Agreement (NAFTA), signed into effect by George H W Bush, Mexican president Carlos Salinas de Gortari and Canadian prime minister Brian Mulroney in 1994, has increased movement between the three nations, and helped swell a wealthy, English-speaking Mexican middle class in major cities including Guadalajara, which managed to avoid the worst of Mexico’s bloody drug wars.

iTexico is part of the Guadalajara tech boom, a move that has seen $120 million poured into more than 300 startups since 2014. The state of Jalisco exports $21bn in tech products and services per year, and global firms like Oracle and IBM have significant presences.

85,000 tech graduates come out of Jalisco’s 12 universities each year. More and more are working in the tech industry, which is said to be worth around an annual $12bn. Since iTexico began operation the local ecosystem has “changed dramatically,” Kumar says. Tech firms from India, Russia, Ukraine and the US have been busy setting up shop. Universities have expanded tech programs. Salaries have gone up, as have several high-rises catering to an influx of wealthy workers.

“Because of NAFTA provisions, movement of professionals between US, Mexico and Canada is not as dependent on H-1B as with other countries,” Kumar says. “Nothing has changed for companies like ours. In fact, due to the H-1B concerns, companies in US are now looking more at Mexico for talent.

“Movement of people, goods, services and technology is the same as before,” he adds. “It is almost as if nothing as happened and it is business as usual.”

That may not resonate with millions of undocumented Mexican and other migrants living in the US, who have seen their rights to live in America under threat under Donald Trump’s conservative, protectionist rule. The President has attempted to incentivize companies to bring jobs back from Mexico to the US, and has issued statements on the Mexican population perceived by many to border on racism.

On November 10, under two days after Donald Trump won the 2016 Presidential Election, Kumar sent a letter to his team. “Today is the dawn of a new chapter,” he wrote. “While the results are surprising and may cause some concerns for you, we must understand, change is a fact of life.”

Kumar added that there would be, “no changes to our strategy and plans for the next few months.” In the intervening months, while the White House has issued statements and proposed policies to hinder interaction between the US and Mexico, businesses on the border have been busy doing the opposite.

This month the Texas-Mexico Trade Coalition was formed. The new agreement, Texas Association of Business CEO Jeff Moseley said, will contemplate “so much development in technology” that has occurred since NAFTA’s implementation. That will help firms like iTexico, which contribute to the $579bn traded each way between Mexico and the US.

Enthused by the talent, proximity and cost-effectiveness on offer, venture capitalists have begun flooding into Jalisco. Exits and big funding rounds are no longer pie in the sky. Local governor Jorge Aristóteles Sandoval Díaz has been on the corporate campaign trail, meeting with political and business leaders in the US and preaching his state’s potential benefits. “We want tech companies to know there is a huge opportunity for them to grow,” he told USA Today this February.

Ties to Kumar’s native India are being seen as a huge potential boost for Mexico’s economy. The Financial Times recently reported that Tech Mahindra, one of India’s largest IT companies, wants to double its Mexico operations in the next 18 months, if the president’s H1-B visa crackdown comes into place.

Elon Musk chose Guadalajara last September as the location in which to announce his plans to colonize Mars with interstellar project SpaceX. It also hosts a number of tech conferences each year, bringing people from all over Latin America and the world. Travel connections to its international airport are increasing and money is helping infrastructural development on all levels. The city is becoming a modern boomtown.

Ironically, says Kumar, “the new US government is helping Mexico. The increased awareness and media coverage about Mexico is making business look at Mexico again and realize that it is actually a really good idea for the two countries to engage even more.” That extends not only to goods like sugar and corn, which Mexico buys from US suppliers in huge quantities, by consumer electronics and IT services.

Kumar adds, “The city itself is a beautiful place to live and work.”

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