“Unless you stop asylum seekers, I’m going to strangle American manufacturing and farming, cut off the supply of avocados, undermine my demand (made the very same day!) to immediately pass NAFTA 2.0 and deal another blow to the United States auto industry!”
That’s essentially what President Trump did on Thursday in what is sure to go down as the most counterproductive move in the most counterproductive trade policy in U.S. history.
The Post reports:
President Trump on Thursday said he would impose a 5 percent tariff on all goods entering from Mexico unless it stopped the flow of illegal immigration to the United States, a dramatic escalation of his border threats that could have sweeping implications for both economies. ...
After the 5 percent tariffs are imposed on June 10, the White House said it would increase the penalties to 10 percent on July 1 and then an additional 5 percent on the first day of each month for three months. The tariffs would stay at 25 percent “until Mexico substantially stops the illegal inflow of aliens coming through its territory,” a statement by the president said. ...
White House officials did not immediately explain how driving up the cost of Mexican goods might stem the flow of migrants.
Where to start? To begin with, Mexico is already working with us to address the migrant crisis, so threatening Mexico is not likely to help matters. In addition, we depend on Mexican authorities to work with us on issues such as interdiction of drugs and human trafficking — cooperation that we might reasonably expect Mexican authorities to reduce or end in retaliation for the United States waging economic war on their country.
Oh, and tariffs are yet another tax on Americans — who knew Republicans were in favor of so many tax hikes?! — and will weaken Mexico’s economy, thereby prompting more illegal immigration to the United States. The Post reports:
The economic consequences of Trump’s new plan could be swift and severe. Tariffs are paid by companies that import products, so U.S. firms would pay the import penalties and then likely pass some costs along to consumers. Mexico exported $346.5 billion in goods to the United States last year, from vehicles to fruits and vegetables. And many manufactured items cross the border several times as they are being assembled.
Keep in mind that Mexico is currently our top trading partner. (“Mexico’s trade with the United States rose to $150.58 billion through the first three months of 2019, according to a WorldCity analysis of latest U.S. Census Bureau data. That’s 3.06 percent above its total trade during the same time period last year.”) To make matters even more confusing, Trump’s move came just as his trade representative, who had been working with the House to reach agreement on the United States-Mexico-Canada Agreement (USMCA), “submitted a draft so-called Statement of Administrative Action, which would allow the Trump administration to send the trade deal to Congress within 30 days.” Trump wants the deal ratified this summer. Good luck with that.
Finally, Trump’s latest outlandish action essentially concedes that his wall (which he insists is being built as we speak!) has done nothing to address the issue of asylum seekers. That is what anyone who knows much of anything about immigration could have told you, since most asylum seekers present themselves at the border.
Agricultural states and border states such as Texas, which has some of the biggest ports of entry for Mexican goods, will be hit especially hard. (“Through March, the top five among the nation’s airports, seaports and border crossings were No. 1 Port Laredo; No. 2 El Paso Border Crossing, Texas; No. 3 Otay Mesa Freeway Border Crossing, Calif.; No. 4 Pharr International Bridge in Texas; and No. 5 Santa Teresa Border Crossing, N.M.”)
Rural areas are hit hardest by retaliatory tariffs, a Brookings Institution study found last year. The study showed that “counties that voted for President Trump are more exposed to the tariffs, as measured by the share of exports in tariff-affected industries (8.1 percent) and the share direct and indirect jobs those exports support (8.1 percent). Comparatively, in counties that voted for Hillary Clinton, 4.2 percent of exports are in tariff-affected industries, which support about 3.2 percent of export jobs.”
Other than all that, Trump’s latest trade antic is sheer brilliance.
Red-state Senate Republicans who have refused to claw back trade authority from the president have no one to blame but themselves for yet another potential economic crisis cooked up by Trump. Wall Street Republicans who have continued to back an unfit, lawless president — But tax cuts! — might be in for many rocky days as the market reacts to Trump’s latest assault on free-market capitalism.
With the economy just about the only thing propping up the Trump presidency (and the Republicans’ Senate majority), a Trump-induced trade crisis that slows down the economy, especially in red states, might be just the thing to tip the 2020 election to the Democrats — or suggest to red-state lawmakers that enabling Trump is bad for their political health. Might Trump’s removal before he can do more damage be best for all concerned?