Trump's Tariff Gambit
By Marc Scaringi < >
President Trump’s threat to impose tariffs on all Mexican imports until Mexico takes serious action to control its border with the U.S. shocked the Washington Beltway, Wall Street, and the Palacio Nacional in Mexico City. These centers of financial and political power, lulled by a U.S. Congress that has refused to act and activist federal judges who have stymied Trump’s border control efforts at every step, were jolted awake by Trump’s ultimatum. But they should not have been surprised. The president issued a similar threat back in April. And, Trump promised from day one of his presidential campaign that he would make stanching the flow of illegal immigration, crime, and drugs northward and of U.S. factories and jobs southward a focal point of his presidency
During his presidential campaign kickoff at Trump Tower in 2016, Trump lamented, “When do we beat Mexico at the border? They’re laughing at us, at our stupidity. And now they are beating us economically. They are not our friend, believe me. But they’re killing us economically.” Trump was right. That year the U.S. suffered a $64 billion trade deficit in goods with Mexico; in 2018 it reached $81 billion. In comparison, the year before the North American Free Trade Agreement (NAFTA) took effect the U.S. had $1.6 billion surplus in goods with Mexico; the year after, a $15 billion deficit. The U.S. Bureau of Labor Statistics reveal nearly 4.5 million U.S. manufacturing jobs have been lost since NAFTA.
In that same speech, Trump also denounced our immigration and Mexican border policy. He declared, “The U.S. has become a dumping ground for everybody else’s problems…When Mexico sends its people, they’re not sending their best…They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime...” Trump’s right. Those who illegally immigrate into the U.S. are not among Mexico’s best and brightest -- Mexican doctors and scientists are not wading across the Rio Grande to get into the U.S. Illegal immigration brings problems; for example, those who come here illegally cause a disproportionate number of crimes compared to natural born Americans. Further, Mexico not only serves as the staging ground for hundreds of thousands of illegal border crossings into the U.S. each year, it is also the primary country of origin for human trafficking into the U.S.and its drug cartels are our largest supplier of heroin, methamphetamines, and cocaine.
Mexico is a big part of the problem on our southern border. And because his hands have been tied by the Congress and the courts, Trump has no choice but to look to Mexico to help fix it. The tariffs are intended to cudgel the Mexican government into quick action. And, they’ve certainly garnered the attention of the Mexican government. That’s because Mexico has so much to lose if the tariffs are imposed. NAFTA transformed Mexico into an export-driven manufacturing power -- because it incentivized so many U.S. factories to relocate south of the border. And, the U.S. is Mexico’s largest trading partner by far. Some 80 percent of Mexico’s exports are to the U.S. So, Mexico is highly vulnerable to U.S. tariffs. As Trump explained, “…Mexican companies will move back to the United States once the tariff reaches the higher levels. They took many of our companies and jobs, the foolish Pols let it happen, and now they will come back…” Trump is applying powerful leverage against Mexico -- its leaders know that tariffs, particularly high ones, will reverse their gains from NAFTA as U.S. companies start packing up and coming home to avoid the tariffs.
In response to Trump’s ultimatum, Mexican President Andres Manuel López Obrador immediately dispatched his foreign minister to meet with U.S. Secretary of State Mike Pompeo in Washington to try to work out a solution. Economists are warning that the tariffs will push Mexico into a recession. Lopez Obrador knows how serious this is. He’s already indicated he’s prepared to reach a deal. He’ll try to placate Trump by offering lip service to his demands while hoping Trump will back down due to tremendous pressure from Wall Street, the D.C. Beltway, and the media. But, if Trump sticks to his guns, imposes those tariffs and ratchets them up, he may coerce the Mexican government into forcefully confronting and even eradicating its drug cartels and human traffickers and carrying out mass deportations of Central Americans illegally crossing through Mexico. Perhaps Mexico will even build the wall on our southern border itself.
By Marc Scaringi < >
President Trump’s threat to impose tariffs on all Mexican imports until Mexico takes serious action to control its border with the U.S. shocked the Washington Beltway, Wall Street, and the Palacio Nacional in Mexico City. These centers of financial and political power, lulled by a U.S. Congress that has refused to act and activist federal judges who have stymied Trump’s border control efforts at every step, were jolted awake by Trump’s ultimatum. But they should not have been surprised. The president issued a similar threat back in April. And, Trump promised from day one of his presidential campaign that he would make stanching the flow of illegal immigration, crime, and drugs northward and of U.S. factories and jobs southward a focal point of his presidency
During his presidential campaign kickoff at Trump Tower in 2016, Trump lamented, “When do we beat Mexico at the border? They’re laughing at us, at our stupidity. And now they are beating us economically. They are not our friend, believe me. But they’re killing us economically.” Trump was right. That year the U.S. suffered a $64 billion trade deficit in goods with Mexico; in 2018 it reached $81 billion. In comparison, the year before the North American Free Trade Agreement (NAFTA) took effect the U.S. had $1.6 billion surplus in goods with Mexico; the year after, a $15 billion deficit. The U.S. Bureau of Labor Statistics reveal nearly 4.5 million U.S. manufacturing jobs have been lost since NAFTA.
In that same speech, Trump also denounced our immigration and Mexican border policy. He declared, “The U.S. has become a dumping ground for everybody else’s problems…When Mexico sends its people, they’re not sending their best…They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime...” Trump’s right. Those who illegally immigrate into the U.S. are not among Mexico’s best and brightest -- Mexican doctors and scientists are not wading across the Rio Grande to get into the U.S. Illegal immigration brings problems; for example, those who come here illegally cause a disproportionate number of crimes compared to natural born Americans. Further, Mexico not only serves as the staging ground for hundreds of thousands of illegal border crossings into the U.S. each year, it is also the primary country of origin for human trafficking into the U.S.and its drug cartels are our largest supplier of heroin, methamphetamines, and cocaine.
Mexico is a big part of the problem on our southern border. And because his hands have been tied by the Congress and the courts, Trump has no choice but to look to Mexico to help fix it. The tariffs are intended to cudgel the Mexican government into quick action. And, they’ve certainly garnered the attention of the Mexican government. That’s because Mexico has so much to lose if the tariffs are imposed. NAFTA transformed Mexico into an export-driven manufacturing power -- because it incentivized so many U.S. factories to relocate south of the border. And, the U.S. is Mexico’s largest trading partner by far. Some 80 percent of Mexico’s exports are to the U.S. So, Mexico is highly vulnerable to U.S. tariffs. As Trump explained, “…Mexican companies will move back to the United States once the tariff reaches the higher levels. They took many of our companies and jobs, the foolish Pols let it happen, and now they will come back…” Trump is applying powerful leverage against Mexico -- its leaders know that tariffs, particularly high ones, will reverse their gains from NAFTA as U.S. companies start packing up and coming home to avoid the tariffs.
In response to Trump’s ultimatum, Mexican President Andres Manuel López Obrador immediately dispatched his foreign minister to meet with U.S. Secretary of State Mike Pompeo in Washington to try to work out a solution. Economists are warning that the tariffs will push Mexico into a recession. Lopez Obrador knows how serious this is. He’s already indicated he’s prepared to reach a deal. He’ll try to placate Trump by offering lip service to his demands while hoping Trump will back down due to tremendous pressure from Wall Street, the D.C. Beltway, and the media. But, if Trump sticks to his guns, imposes those tariffs and ratchets them up, he may coerce the Mexican government into forcefully confronting and even eradicating its drug cartels and human traffickers and carrying out mass deportations of Central Americans illegally crossing through Mexico. Perhaps Mexico will even build the wall on our southern border itself.
