The Mexican peso fell against the U.S. dollar on Monday after voters in the second-largest Latin American economy overwhelmingly voted in favor of a far-left candidate as its new president.
The peso pulled back 0.6 percent versus the dollar, erasing slight gains seen on Sunday, to trade at 20.032.
Andres Manuel Lopez Obrador, better known by his initials AMLO, received more than 50 percent of the vote in an election held Sunday. His two closest rivals only got about 23 percent and 15 percent of the vote respectively.
His victory, however, could lead to tougher negotiations between Mexico, the U.S. and Canada on a new NAFTA deal at a time when trade relations between the three countries are rising.
“In many ways, it’s going back to the era before NAFTA in Mexico,” Carlos Gutierrez, former U.S. Commerce secretary, told CNBC’s “Squawk Box” on Monday. “I don’t think he’s going to make the negotiations any easier because a lot of what he would like to do will bump up against NAFTA.”
“This is not a good event here,” Gutierrez said. “He’s not going to back away from his instincts, and his instincts are left-wing, populist, anti-multinational (companies), nationalist.”
Tensions between the U.S. and Mexico rose earlier this month after Mexico slapped tariffs on several U.S. agriculture products, including pork, cheese and apples. Mexico implemented the charges in retaliation for U.S. levies on Mexican steel and aluminum products.
AMLO headed into Sunday’s election with a massive lead over his opponents in the polls. His campaign gained momentum in part because of his pledge to fight widespread corruption plaguing the country.
Last week, he said “the country will be cleansed” of corruption, adding he would “pull up by its roots the corrupt regime,” which he blames for the country’s chronic violence and widespread poverty.
But despite his promises to fight these problems, investors have sold off Mexican stocks recently as they feared some of AMLO’s policies could cripple the economy. AMLO proposed during his campaign rolling back privatizations in the country’s oil industry as well as doubling pensions for the elderly during his campaign.
However, AMLO struck a more conciliatory tone regarding the U.S. on Sunday, saying in a victory speech he would seek “friendly relations” with the U.S.
Trump also congratulated AMLO in a tweet, stating he looks forward to working with him.