Trump tariffs on Mexico invite more pain for US
New York Times: So we’re going to tax Americans until Mexico stops allowing people from Central America to exercise their legal right to seek admission to the United States?
Seems pretty foolproof.
President Trump announced Thursday evening on Twitter, his preferred medium for policymaking, that he plans to impose new tariffs on all imports from Mexico, “until the illegal immigration problem is remedied.”
The tariff would begin at 5 percent June 10 and gradually rise to 25 percent by October.
Mr. Trump persists in the falsehood that tariffs are paid by America’s trading partners. The truth is that Mexico would no more pay these tariffs than it is paying for the construction of a border wall. The evidence is clear: Mr. Trump’s tariffs are taxes being paid by Americans.
This new tax would sit atop Mr. Trump’s tariffs on aluminum and steel imports, and Mr. Trump’s tariffs on Chinese imports.
Mexico would most likely respond by imposing retaliatory tariffs, which is especially bad news for the probable targets: American farmers. Earlier this month, Mr. Trump ended a tariff on Mexican aluminum and steel, and Mexico ended a tariff on American farm goods. So much for that false dawn. Farmers may need to resume the search for new markets.
Taxation is always painful, and always the question is whether the benefits outweigh the pain. In this case, Mr. Trump is using tariffs as a cudgel to induce Mexico’s cooperation in keeping immigrants from America’s southern border. While the cost of the tariffs would be paid by Americans, the Mexican economy likely also would suffer a loss of sales to the United States.
TARIFFS ARE WRONG TOOl
Mr. Trump might succeed in pressuring Mexico to take stronger steps on immigration. Tariffs, however, are a very crude tool.
The immigrants entering the United States through the southern border are fleeing problems in Central America that are beyond the control of the Mexican government.
Moreover, while Mr. Trump tends to refer to all of the immigrants as illegal, many of them are exercising a legal right to seek asylum.
Past administrations have sought cooperation from Mexico on immigration issues without disrupting economic relations between the two countries. Mr. Trump’s decision to mix the two issues threatens to undermine his efforts to renegotiate the North American Free Trade Agreement, which in turn is part of his strategy to compete with China.
Mexico is a plausible alternative destination for low-cost manufacturing work, and the proximity of Mexico can allow manufacturers to keep some of their production in the United States. Many vehicles, for example, are produced by a combination of Mexican, American and Canadian factories. Slapping tariffs on Mexican imports makes that kind of production more expensive and could encourage companies to move further afield.
Once again, rather than acting strategically, Mr. Trump is lashing out – and Americans will feel the pain.