Donald Trump’s pledge to build a “big, beautiful wall” along the U.S. southern border would do more than shut off migration from Mexico — it risks choking off a burgeoning array of energy projects between the two countries that fossil fuel and power companies are hoping to cash in on.

The once-closed Mexican oil and gas industry has become a new market for U.S. and Canadian companies in recent years, inspiring billions of dollars in investments and an increasing flow of natural gas exports heading south of the border. Mexico’s efforts to modernize its electric grid are also attracting investment from U.S. firms, as well as proposals for border-crossing transmission lines that could open the door for trade in new wind and solar power resources between the two countries.


But experts fear Trump’s pledges to build a border wall, restrict immigration and unravel the North American Free Trade Agreement will spoil all that.

A chill in trade could threaten Mexico’s efforts to shift away from oil and toward natural gas as a power source, driven by low-cost imports of U.S. shale gas. “It would hurt commercial ties to the U.S., it would hurt U.S. products, and it would hurt Mexico,” one Mexican energy industry source said.

Mexico began revamping its power system and opening its fuel sector to private investment in 2013, the year that Congress approved a major cross-border oil and gas development pact negotiated by Hillary Clinton’s State Department. Industries and politicians on both sides of the Rio Grande want to see partnerships along the border become as nearly seamless as they are on the U.S.-Canadian line.

And it’s the United States that receives most of its economic gains from the energy trade with Mexico in the form of U.S. gas traveling south through pipelines, said Stephen Munro, a policy analyst with Bloomberg New Energy Finance.

“If a President Trump were to act on his campaign threats to curtail NAFTA and clamp down on migration from Mexico to the U.S., the outlook for those planned projects could go dark in a hurry,” Munro wrote in an email.

Some in Mexico fear a Trump administration could use natural gas exports to Mexico as a “political weapon,” the Mexican energy source said. But even if that doesn’t happen, the source said, a cooling of ties between the two nations could imperil continent-wide collaboration on energy data and other, more fine-grained efforts that have ramped up in recent years. “If the relationship becomes toxic, it’s easy to see how those kinds of discussion and cooperation at the technical level could also be harmed.”

Trump said last week he would seek to “immediately renegotiate” NAFTA or withdraw from the pact if Canada and Mexico didn’t green-light those talks. The businessman has also said he would force Mexico to pay for the border wall, a claim that former Mexican President Vicente Fox attacked with colorful language while accusing Trump of ushering the U.S. “back to the era of the ‘ugly American.’

Trump’s campaign didn’t respond to a request for comment.

Mexico is one of 18 countries with which the U.S. has free trade in natural gas, and southbound natural gas exports through pipelines have approximately tripled since 2005. Just last month, TransCanada and IEnova, a Mexican unit of U.S.-based Sempra Energy, won a $2.1 billion contract to build and operate an offshore pipeline that will link up near Brownsville, Texas, and send gas to Mexico. A handful of smaller pipelines are also in the works.

Cross-border energy projects can sometimes inspire huge political fights — such as the seven-year drama that culminated in the U.S. rejection of the proposed Keystone XL oil pipeline from Canada. But the federal government's processes for approving cross-border gas pipelines and electric transmission lines are largely “depoliticized,” said David Goldwyn, who has worked on international energy affairs at the departments of energy and state during the Clinton and Obama administrations.

Yet, “it is certainly conceivable that a Trump administration, which wants to abandon NAFTA, could take a different view with respect to whether this trade is in the national interest.”

Those sales of cheap U.S. gas to Mexico are a big part of the growing relationship, but there are also symptoms of pent-up frustration between the countries.

“The United States and Mexico have wanted to work more closely together on energy for decades, and it usually has been something of a Mexico problem where there [was] not a lot of investment opportunity,” said Sarah Ladislaw, who directs the Center for Strategic and International Studies’ energy and national security program. That was mainly because Mexico fiercely guarded its state-owned oil and gas resources.

“Over the course of this last administration, and because of things changing on both sides of the border, there is a whole new dialogue that 10 years ago was completely unthinkable from a U.S.-Mexico cross-border investment — and even policy-dialogue — perspective,” she said.

Even in an adversarial political environment, Ladislaw believes that many of the changes happening in Mexico and in its relationship with the U.S. will persist.

“It’ll be hard to put it all back in the box,” she said. “We don’t know what [Trump] actually cares about versus what he just says. But I do think the broadly antagonistic stance towards Mexico is something that would cause people a little bit of pause.”

Mexico’s energy reform effort has set several pieces into motion at once, such as opening access to the country’s state-controlled oil and gas reserves to the private sector — including U.S. companies — and introducing competition into power generation. And pile onto that several political agreements with the U.S. that support identifying areas for potential renewable energy projects in Mexico, making its electric grid more reliable and bolstering small- and medium-sized energy firms there.

And one of the country’s grander visions is to build more electrical connections with the U.S. grid, including a 15-year plan that Mexican officials released this spring that calls for more high-voltage lines across the border.

“What is truly remarkable is that Mexico is thinking about a huge project to build the interconnection corridor along the border with the United States,” Héctor Beltrán, director general of Mexico’s energy regulator, told members of the U.S. Federal Energy Regulatory Commission last month. Those new connections could have clear benefits for Mexico, which is looking to gain access to relatively cheap U.S. electricity and more ways to meet its own clean-energy targets.

But Beltrán also said more projects in Mexico may be looking to sell clean electricity to U.S. border states that are trying to meet their own green energy mandates.

“Right now, there’s a terrific harmony of interests,” Goldwyn said. The U.S. has an economic interest in exporting gas, and even some light crude, because of relatively weak domestic demand. Meanwhile, states like Texas have an interest in sending their surplus wind power elsewhere.

Some experts are optimistic that such efforts could continue even during a Trump presidency, chalking up his rhetoric against NAFTA and Mexico to campaign talking points.

“There are candidates from both sides of the aisle, from multiple elections in the past, that’ve said we need to reopen NAFTA — and nobody has done it," said Karen Harbert, president of the U.S. Chamber of Commerce’s energy program. “And nobody has done it, because it’s been a benefit to all three countries, provided a lot of jobs and stimulated a lot of investment.”

American energy companies have successfully invested in areas of the world that face political upheaval and changes in government, said Harbert, who led the Energy Department’s international affairs office for most of President George W. Bush’s second term.

“With Keystone in the rearview mirror, one can never say that politics won’t enter into the discussion. However, if the process on our side of the border is allowed to play out, it should work,” she added. “I think it would be hard to see any type of official Mexican action in retaliation for any statement made on this side of the border that would interfere with a private-sector-to-private-sector project. The commercial interests of the companies, and, ultimately, the energy interests of Mexico, would outweigh that in my view."

At last month’s summit among leaders from the U.S., Canada and Mexico, the White House announced discussions to deepen electric reliability between the U.S. and Mexico, something Canada and U.S. are already in lockstep on.

Still, the notion of building up wires along the southern border is taking baby steps.

Sempra built its Energía Sierra Juarez 155-megawatt wind project in Baja California, which sells its electricity across the border to California’s San Diego Gas & Electric. The only real transmission project awaiting the Energy Department’s blessing is Hunt Power’s request to send up to 300 megawatts across the Arizona border into northwest Mexico.

“In my experience, the most challenging [cross-border] projects were the electric-transmission projects," said David Sandalow, who was DOE’s assistant secretary for policy and international affairs during President Barack Obama’s first term.

“They require a fair amount of institutional cooperation on each side and require coordination between U.S. and Mexican institutions, and I would not expect to see that grow in an environment in which the overall relationship was extremely toxic,” added Sandalow, who is now the inaugural fellow at Columbia University’s Center on Global Energy Policy.

But the momentum for similar projects may pick up as Mexico fights to keep its power costs down. When Mexico’s first wholesale power market came online in January, prices rang in at about $60 per megawatt-hour — two or three times the average in Texas.

Lilian Alves, head of Bloomberg New Energy Finance’s Latin America research office in São Paulo, Brazil, said she hadn’t seen any “concrete steps” yet to carry out the vast interconnection project along the border that Beltrán described to regulators at FERC. However, the chatter has picked up.

“I’ve been hearing about this much more ever since the wholesale market in Mexico started,” she said. “It’s just because they realized the big price gap between [markets] that are very close by.”

Elana Schor contributed to this report.