During the raucous rallies that helped propel Donald Trump to the White House, the nation of Mexico was one of his favorite rhetorical punching bags, said León Krauze in WashingtonPost.com. But the insults and abuse our bullyin-chief gleefully rained down on our southern neighbor last week were “worse than anything in the campaign.” First, President Trump signed executive orders affirming his intention to “renegotiate” the North American Free Trade Agreement and build his notorious border wall. Then, just prior to a scheduled meeting with Mexican President Enrique Peña Nieto, Trump insisted that he would make Mexico pay for the wall’s construction, with White House spokesman Sean Spicer saying that could be accomplished by slapping a 20 percent border tax on items imported from Mexico. An affronted Peña Nieto canceled the meeting, amid “a diplomatic rift of a magnitude not seen in decades.” If we start a trade war with Mexico, said Greg Grandin in TheNation.com, Americans will suffer, too. Mexico is our third-biggest trading partner, and our consumers will pick up the cost of any tariff imposed on its products. Trump’s new slogan should be “Make Avocados Expensive Again.”
Spicer later clarified his threat to impose a 20 percent import tax, said Eric Levitz in NYMag.com, saying he was referring to longstanding Republican proposals for a border adjustment tax on all imports. Similar to the value-added tax used in most European countries, a BAT does raise the price of imports, but would also promote a stronger dollar. Since a stronger dollar buys more foreign goods, neither U.S. consumers nor Mexican suppliers would notice a big difference. Even some Democrats are pro-BAT, said Dylan Matthews in Vox.com, because it would generate $1.2 trillion in revenue over a decade, and make it harder for corporations to dodge U.S. taxes by offshoring their profits. The mechanics of the tax are complex, and so would be the politics of getting it through Congress. But a BAT wouldn’t cause a trade war, and no, it wouldn’t “raise the price of your avocados.”
Scuttling NAFTA sure would, said Jude Webber in the Financial Times. If Mexico won’t bend to Trump’s demands and he withdraws the U.S. from the treaty, as he has threatened, the effect on both nations’ economies would be devastating. Trade between the U.S. and Mexico amounts to $580 billion a year, with about 5 million American jobs depending on this exchange. Countless U.S. firms, particularly in the auto industry, depend on Mexican labor and products as links in their supply chains, and the savings produced by these chains have made American products competitive with those made in Asia and Europe. Pulling out of NAFTA would instantly “stall production in factories in the U.S. and Canada,” said The New York Times in an editorial. It would also push up the prices Americans pay for cars, fresh vegetables, fruits, and other products.
Trump may not care, said Mona Charen in NationalReview.com. He seems to harbor a deep and irrational “need to insult and humiliate Mexico.” To indulge that need, and to fulfill his nativist pledges to his supporters, the president may well decide to enact reckless trade policies, regardless of the repercussions. Trump and his supporters should be careful what they wish for, said Elvia Diaz in AZCentral.com. If the president does initiate a trade war, or pull out of NAFTA, the Mexican economy will crater. The economic desperation that follows will produce a huge influx of “poor, displaced Mexican workers, and believe me there won’t be a wall tall enough to keep them out.”
