Without question, there has been a substantial uptick in migrants leaving Honduras, El Salvador and Guatemala, traveling across Mexico in an effort to reach the United States. Poverty, corruption and violence are the primary reasons they leave. Levying tariffs on Mexico would not deal with those issues. It would not encourage people from the Northern Triangle to stay home.
Nor would tariffs that tax American companies and consumers help Mexico deal with the refugee problem. In fact, tariffs would make matters much worse. Shrinking U.S. demand for Mexican products would not only diminish Mexico’s already stressed resources to deal with the migration influx, but it would also weaken Mexico’s economy, causing that nation to lose jobs and eventually shed workers. Ironically, these tariffs would more
stimulate an even larger number of migrants seeking to cross our southern border in search of increased prosperity.
Meanwhile, tariffs would
adversely affect the U.S. economy. Our farmers, already hurt by the U.S.-China tariff war, would feel even more pain. Mexico is our second-largest
export destination. This year, Mexico has been our largest purchaser of corn. Since we entered the North American Free Trade Agreement, our agricultural exports to Mexico are up 500 percent
. We can expect that tariffs would cause our exports to shrink considerably.
With respect to manufacturing, our supply chains are tightly linked. On average, the products that we import from Mexico contain 40 percent U.S. content; that compares with 2 percent from Japan and 4 percent from China. And much of what we import from Mexico are intermediate goods that enhance our productivity and make our exports more competitive. We don’t just buy goods from one another; we make things together. Auto parts cross our southern border as many as eight times. Imposing a 5 percent tariff on each crossing would make the end product far less competitive. Fewer sales means fewer jobs. Today, the economic linkage between our two economies supports 5 million U.S. jobs.
All of these problems would worsen with tariffs,
for we could expect sharp retaliation from Mexico. We could also expect Mexico to rethink its support for our updated trade agreement with it and Canada, thus creating future uncertainty.
Beyond the economic impacts, the threat of these tariffs is corroding the close relationship we have built with our southern neighbor. The increased vibrancy of our post-NAFTA economic relationship has enhanced our security collaboration. Our two governments have worked closely together, sharing intelligence that has enabled us to reduce the reach of organized crime. It was that collaboration that enabled the capture of El Chapo, the kingpin of the Sinaloa drug cartel.
According to the updated March 28, 2019,
report by the Congressional Research Service:
“In February 2018, the State Department set forth a framework for U.S. policy toward the region focused on three pillars for engagement — economic growth and prosperity, security, and democratic governance. Although the framework reflects continuity with long-standing U.S. policy priorities for the region, it also appears to be at odds with the Administration’s actions. . . . The Administration’s proposed foreign aid budget for FY2018 and FY2019 would have significantly cut assistance to the region by more than a third; the FY2020 proposed budget request also would cut funding to the region by about 30%.”
If the president is genuinely concerned about the northern march of migrants, the administration needs to put its money where its mouth is.
Tariffs are not an effective tool to deal with immigration issues. Indeed, they would make matters much worse. Far better to work with Mexico and, where possible, other regional leaders to begin to address the root causes for the increased migration.