Trump’s Mexico tariffs don’t make sense, but Americans will pay a steep price anyway if they go into effect

Christina Fattore, West Virginia University

The Trump administration says it intends to slap a 5% tariff on every medium-sized car, avocado and other Mexican import beginning June 10 – all almost US$1 billion worth that crosses the border into the U.S. each day on average.

The president is using the policy as a cudgel to compel Mexico to do more to stem the flow of migrants into the U.S. and says he’ll increase the tariff if things don’t improve. As a scholar who studies trade policy, I have a hard time agreeing with the president’s strategy that tariffs can be used as a stick to pressure another country to do whatever he wants.

More than that, Americans will pay the price – as they have with Trump’s U.S.-China trade war.

Driving up costs to consumers and businesses

Tariffs, which are a tax imposed on imports paid by consumers in the recipient country, are typically used as a protectionist measure.

That is, governments use them to promote domestic goods in the face of global competition. For instance, if a domestically made item costs less than a foreign made item – due to tariffs increasing the price – trade scholars would expect a consumer to choose the less expensive, domestic item.

This would make sense in an economy where consumers have actual choices about whether to buy a foreign or domestic product. However, due to the evolving global economy, most consumer goods are made abroad or contain foreign parts. All “U.S.-made” cars, for examples, contain foreign parts. And my research has shown that it is not easy to understand how “foreign” a product is.

One good example is avocados. Mexico produces 11 for every 1 grown in California, and demand is unlikely to diminish for avocado toasts and guacamole, so Americans will simply have to pay more.

The long and short of it is that a 5% tariff on all imports from Mexico will drive up costs to American consumers and businesses by almost the entire amount, meaning using them to solve a very different border security issue will be very painful.

Killing the USMCA

It is also quite confusing to place tariffs against Mexico.

Just six months ago, the U.S, Canada and Mexico finished negotiating a massive trade deal to replace the often-reviled North American Free Trade Agreement. Although the deal has been signed by leaders of each country, it has not yet been ratified by the U.S. Congress.

President Donald Trump, who has frequently blasted NAFTA and trumpeted its replacement, now risks seeing his U.S., Mexico, Canada Agreement torpedoed. House Democrats were already on the fence about whether to ratify it and may use his tariff threats against Mexico over immigration as another reason to vote it down – or to get an immigration deal more to their liking.

And Mexico, which also has yet to ratify the USMCA, is also talking about retaliation against any tariffs Trump imposes, including rejecting the negotiated accord. Tearing up the deal could cause economic turmoil for the U.S., particularly as Mexico is the second-largest export market for U.S. goods.

All in all, academic research has shown economic sanctions, including tariffs, aren’t an effective way to conduct foreign policy. Unfortunately, they seem to have become the Trump administration’s go-to strategy when it doesn’t get its way.The Conversation

Christina Fattore, Associate Professor of Political Science, West Virginia University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Related posts

28 comments

real money casino online usa July 1, 2020 at 4:37 pm

online casino slots no download

casino slots gambling

viagra for sale July 3, 2020 at 6:54 am

generic viagra names

sildenafil 100mg

best online casino usa July 5, 2020 at 6:33 pm

online casino games

slot machine games

empire casino online July 7, 2020 at 9:17 pm

play online casino real money

best online casino real money

cialis cialis generic July 10, 2020 at 12:45 pm

purchasing cialis online

tadalafil online canadian pharmacy

quick cash loans July 12, 2020 at 10:29 am

installment loans

loan online

cash loans July 15, 2020 at 12:41 pm

installment loans

quick cash loans

payday loans online July 18, 2020 at 2:38 pm

online loans

payday loans online

viagra 100mg July 21, 2020 at 4:50 pm

viagra pills

viagra 100mg

cialis buy July 24, 2020 at 7:45 am

new cialis

20 cialis

cialis 20 July 28, 2020 at 1:37 pm

buy cialis

new cialis

5 mg cialis July 31, 2020 at 2:14 am

cialis internet

new cialis

generic for cialis August 2, 2020 at 3:11 pm

5 mg cialis

20 cialis

cialis to buy August 5, 2020 at 4:02 pm

cialis internet

cialis 20

viagra online pharmacy August 8, 2020 at 6:08 pm

viagra prices

buy cheap viagra

online casino games for real money August 12, 2020 at 3:25 am

casino gambling

golden nugget online casino

real money online casino August 15, 2020 at 10:15 pm

casino slots

casino online real money

online casinos usa August 19, 2020 at 10:47 pm

real money casino games

jackpot party casino

viagra alternative August 22, 2020 at 4:16 pm

viagra price

order viagra online

sildenafil 100mg August 25, 2020 at 6:55 am

viagra cost

generic viagra reviews

sildenafil 100mg August 28, 2020 at 2:50 am

viagra prices

free viagra

tadalafil cialis August 31, 2020 at 12:54 pm

tadalafil dosage

tadalafil cost

cialis coupon September 4, 2020 at 3:51 am

tadalafil 40 mg

buy cialis generic

discount cialis September 6, 2020 at 8:07 pm

cialis cialis online

generic cialis at walmart

buy cialis September 12, 2020 at 12:17 am

cialis prescription online

cialis professional

vegas casino online September 14, 2020 at 1:33 am

casinos

real casino online

real money casino online September 17, 2020 at 10:45 am

golden nugget online casino

play casino

Buy real viagra online without prescription November 13, 2020 at 10:54 am

Canadian healthcare viagra sales

Canada viagra generic

Leave a Comment