The upcoming US election could have far-reaching consequences beyond American borders. In this opinion piece, Nestor Quixtan examines the potential US election impact on Guatemala, focusing on economic, social, and political ramifications in the light of a Donald Trump victory.
The prospect of a Republican victory in the upcoming US election has officials in Guatemala bracing for impact. A second term for Donald Trump could seriously affect the Guatemalan economy and society. This article examines three key areas in which a Republican administration in the United States could impact Guatemala. As a disclaimer, I do not take sides in this matter; my goal is to remain impartial.
Mass Deportations
Tackling illegal immigration is one of Trump’s main policies. This rhetoric is nothing new; Trump emphasized immigration in 2016 and largely followed through on his campaign promises.
CNN quoted ex-President Trump saying he would “have no problem using the military” to enforce his immigration agenda, particularly mass detentions and deportations. Guatemala could become the destination for these migrant roundups, as Mexico opposes accepting deported migrants.
The main issue is that Guatemala lacks the resources and infrastructure to cope with mass deportations. While many deportees will seek to return to the US, many will linger in Guatemala indefinitely. This situation could create a humanitarian crisis given local communities’ inability to support deportees.
Slashed Remittances
The Guatemalan economy relies heavily on remittances from the US. Trading Economics reported over $2 billion in remittances during May 2024 alone, a startling figure considering that the Guatemalan economy was valued at just over $100 billion in 2023.
A mass deportation campaign could slash the number of Guatemalans living and working in the US, reducing the dollars entering the Guatemalan economy. This point is crucial as Guatemala has no other export industries that could make up the difference. Moreover, the domestic economy cannot produce enough employment to support potential waves of returning migrants. Unemployment would soar, prompting many deportees to attempt re-entering the U.S. by any means necessary.
Another possibility that could re-emerge during a second Trump term is taxing remittances. A 2017 NPR piece examined a proposal to tax outgoing remittances to generate revenue for the Trump border wall. While this tax never took effect, a second Trump administration might revive such a policy, further reducing remittances entering Guatemala and exacerbating the desire for locals to head north.
Economic Destruction
A sharp decline in remittances would reduce the dollars in circulation, cutting family incomes and pressuring the Quetzal-dollar exchange rate. Businesses could struggle to get loans while inflation rises. This combination may lead to stagflation, further impoverishing Guatemalans.
The Guatemalan economy could enter a recession, affecting Central America’s regional trade and economic growth. As a result, even more locals would consider leaving for the US.
Given the potential ideological differences between the current Guatemalan administration and a possible Republican one, Guatemala might turn to other trading partners (like China) to offset the foreseeable economic downturn. While Guatemala has not embraced China in the same way many neighboring countries have, a Trump administration may leave it no choice.
A second Trump administration, while not catastrophic, would hinder Guatemalan President Bernardo Arevalo‘s pursuit of his political, social, and economic agenda. A severe economic downturn could derail his entire program, leaving the Guatemalan public and private sectors scrambling for solutions.
Given Trump’s focus on illegal immigration, Guatemala may need to take steps to offset potential waves of mass deportations. But first, Mr. Trump needs to win the election. With that outcome a real possibility, the US election impact on Guatemala could be significant and multifaceted.
Nestor Quixtan is a Canadian/Guatemalan economist, linguist, and writer. He lives in Guatemala City.
