Make Mexico our partner again – Washington Examiner
President Trump has already tried to use tariffs to straighten out what he views as a harmful trade deficit. It hasn’t worked at all. In fact, the overall monthly U.S. trade deficit increased by 17% between March 2017 and March 2019.
Even worse, ever since Trump’s new trade war with China, he has had to spend more money bailing out angry farmers hurt by his tariffs than he has taken in revenue from the tariffs themselves.
So no, tariffs haven’t worked in fixing problems directly related to trade. But then why does Trump think they will be more effective in solving problems unrelated to trade — specifically, the much thornier issue of immigration?
Trump threatened this week on Twitter to slap 5% tariffs on Mexico because of what he claims is its lack of cooperation in preventing illegal immigration to the U.S. from farther south. Moreover, he threatens to ratchet those tariffs up by an additional five points a month until they reach 25%. This would amount to approximately $90 billion in new taxes on American consumers, as the Washington Examiner’s Philip Klein pointed out Thursday.
When Mexico retaliates with its own tariffs, this will drive Mexican companies, which get 51% of their imports from the U.S., to take more of their business to other top trading partners, such as China.
Awkwardly, Trump’s new threat comes just ahead of the congressional debate over his new free trade deal with Mexico and Canada. Trump is shooting himself in the foot, potentially killing the deal that his team had painstakingly negotiated but House Democrats must still agree to pass.
In his tweetstorm against Mexico, Trump also nonsensically conflated the issue of Mexican drug cartels with trade policy. “90% of the Drugs coming into the United States come through Mexico & our Southern Border,” he wrote. “80,000 people died last year, 1,000,000 people ruined. This has gone on for many years & nothing has been done about it. We have a 100 Billion Dollar Trade Deficit with Mexico. It’s time!”
Time for what, though? No one pays tariffs on smuggled drugs, and such transactions are not calculated as part of the trade deficit. But farm exports are counted, and Trump is once again endangering a critical market to which American farmers export. This is why both of Iowa’s conservative Republican senators were immediately sour on Trump’s sudden foray into foreign-policy-by-Twitter.
Meanwhile, the more Trump does to ruin Mexico’s legitimate economy with tariffs against its exports, the stronger its cartels and the human smuggling operations will remain.
Trump may also create a new enemy if he keeps this up — an enemy he really doesn’t need. He has, up to now, gotten along surprisingly well with Mexico’s new and volatile leftist president. Instead of working with Trump toward a more prosperous Mexico, the fastest way to end the current migration crisis, Mexican President Andrés Manuel López Obrador could now face a Trump-imposed economic slowdown. So far, he’s been fairly professional about the whole thing, refusing to take Trump’s bait. Mexico’s foreign minister even reached out on Friday afternoon to talk to Trump before a new trade row broke out. But the honeymoon may not last if Trump keeps dragging the Mexican government on social media.
According to reports, Trump didn’t even talk with López Obrador before launching this broadside. That’s not a good sign for the cause of measured, rational diplomacy.