THE TTALK QUOTES 

On Global Trade & Investment
Published By:
The Global Business Dialogue, Inc.
Washington, DC   Tel: 202-463-5074
Email: Comments@gbdinc.org
 
No. 39 of 2019
FRIDAY, MAY 31, 2019

Click HERE for yesterday's quote on Mexico and the U.S.-China Dual 
FOR MEXICO, MORE TARIFFS 
    
 "On June 10th, the United States will impose a 5 percent tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP.  The Tariff will gradually increase until the Illegal Immigration problem is remedied, ..." 

Donald J. Trump
May 30, 2019 
CONTEXT
This is the text of the tweet President Trump sent out at 4:30 p.m. yesterday afternoon.  As his message clearly indicates, the larger context is America's broken immigration system and the related crisis on the southern border.  If the administration sticks to the plan the President has laid out, and if the illegal immigration crisis continues, those tariffs will increase to 25 percent on October 1, 2019, and remain their indefinitely. 
COMMENT
We think these new tariffs on imports from Mexico are a mistake, and we very much hope that the administration will reconsider the decision to impose them. We agree that there is a crisis, and we respect the President's determination to use all of the tools at his disposal to deal with it, but this is a flawed policy.  It is flawed tactically, politically, and ethically.  We shall come back to those concerns in a moment. 

First, it is our view that President Trump deserves more credit than he often receives for addressing long festering problems: from over-regulation at home to the challenges China poses for the United States and for the global trading system.  With respect to the latter, we have not ourselves argued against the 301 tariffs on imports from China because, while they have certainly been costly and disruptive, it is not clear - at least not to us - that less dramatic actions would or could have been effective.  (And, of course, the drama that began with the 301 case against China is still playing out.)

The immigration crisis the President is trying to address with these new tariffs against Mexico is quite different, and that brings us to the three adverbs mentioned above.

Tactically flawed.  Like immigration, President Trump's opposition to NAFTA was what he ran on in 2016.  And he has come a long way in fulfilling the promise to get rid of it.  A NAFTA replacement, the United States-Mexico-Canada Agreement (USMCA) has been negotiated.  Though it still needs to be ratified in all three countries, the leaders of all three have signed the agreement.  As for ratification, that wasn't going to happen so long as the tariffs on steel and aluminum from Canada and Mexico were still in place, but those tariffs were lifted earlier this month.  Yesterday morning, USMCA seemed to be an achievement very much within the President's grasp.  It now seems, once again, a lost cause unless this policy is altered.

Politically flawed.  There are two very different points to be made under this heading.   The first, more obvious one is that Congress is not going to approve a new trade deal with Canada and Mexico while the U.S. is imposing punitive tariffs on imports from Mexico.  Senator Grassley, the chairman of the Senate Finance Committee, has said as much.  And he wants to get USMCA done.

The second political point is more subtle.  It is also more important.  The root cause of America's immigration problem is a breakdown in the American political system, and we are not going to solve that by punishing Mexico with ever higher tariffs.

Ethically flawed.  The ethics here have to do with the nature of borders.  We would argue that protecting one's borders is foundational.  The preamble to the U.S. Constitution set out the purposes for which a new government was to be established.  One of those was to "provide for the common defence."  And we have always understood that to mean defending the borders, at a minimum.

In short, the right of governments to keep invading armies and others from entering into a country without permission is a well-established principle.
Though often asserted, the right of governments to keep people from leaving has a more dubious history.  "Let my people go" is a cry heard throughout the ages.  In the Jackson-Vanik Amendment of 1974, for example, America challenged the Soviet Union's policy of not allowing free emigration of its citizens, especially Soviet Jews.  And clearly Ronald Reagan's famous demand, "Mr. Gorbachev, tear down this wall!" follows in the same tradition.

The relevance here is this.  America's porous southern border is America's problem, and only America - more specifically, only the U.S. Congress - can solve it.   It is worse than counterproductive to try to solve it with punitive tariffs on imports from Mexico or by promoting a principle of conduct that goes against the grain.
SOURCES & LINKS
A Tweet on Tariffs takes you to the President's tweet, quoted above, as it appears on-line.

NAM Reacts is a link to the statement on this development issued earlier by the National Association of Manufacturers, with comments from NAM President Jay Timmons.
 
 

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R. K. Morris, Editor
Joanne Thornton, Associate Editor