Trump Rhetoric Sends Mexico to Brazil Eyeing New Defense Partner

(Bloomberg) -- Donald Trump’s tough talk toward the U.S.’s southern neighbor has managed to do what decades of diplomatic discussions failed to achieve -- get Mexico and Brazil to talk defense.

The Mexican Secretary of National Defense, General Salvador Cienfuegos, is set to visit Brasilia in October for a second round of discussions with his Brazilian peer Raul Jungmann, according to the Mexican embassy in Brasilia and Brazil Defense Products Secretary Flavio Basilio.

Cienfuegos and Jungmann met in Mexico in April during the Aerospace Fair and aim to further talks on how “to diversify the cooperation ties in terms of defense between Mexico and Brazil,” according to an email from the Mexican embassy.

“The meetings we had in April were extremely positive,” Basilio said in an interview in Brasilia. “This new proximity can be attributed to the U.S. developments, with American policy contributing to the search for new partners. We see this as a good opportunity.”

Embraer SA, the Brazilian plane-maker, could be a beneficiary if talks progress. The company has a well-known turboprop light attack aircraft and is tying up negotiations for the first international sale of its new military transport aircraft, the KC-390, to Portugal. Embraer declined to comment.

"Business in the defense area involves trust,” Oliver Stuenkel, an international relations professor at Fundacao Getulio Vargas in Sao Paulo, said in a phone interview. "Any trade is a geopolitical decision which signals who you want to be closer with."

Trump keeps promising to build a wall on the U.S. border with Mexico and make the Mexicans pay for it and he has been pushing for legislation to tighten immigration. He withdrew from the Trans-Pacific partnership pact shortly after taking office. The U.S., Mexico and Canada are meeting later this month to discuss the Nafta treaty, which covers more than $1 trillion of annual trade.

“Trump’s presence generates a lot of uncertainty in Mexico and feeds the sensation that it’s time to rethink a few things in order to compensate possible losses due to the deterioration of the bilateral relationship with the U.S.," Stuenkel said.

Brazil is taking clear steps to support the relationship and boost exports. It’s rewriting legislation to allow the defense sector to focus on exports, and the development bank, BNDES, is adding a new credit line to support the sector, Jungmann said in May.

To contact the reporters on this story: Samy Adghirni in Brasilia Newsroom at sadghirni@bloomberg.net, Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Christiana Sciaudone, Jeran Wittenstein