On Thursday night, President Trump ignited a potential trade war with America’s second-largest trading partner by announcing on Twitter that the U.S. would impose tariffs on all goods coming from Mexico until the border crisis is “remedied.”
On June 10th, the United States will impose a 5% 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 (@realDonaldTrump) May 30, 2019
This is crazy. To merge trade with immigration is not just bad policy. It’s a lose-lose-lose policy: bad for American consumers, workers, and businesses, especially U.S.-based businesses that have production sites in Mexico.
Friday morning we already saw the effects of this ill-conceived strategy as the markets opened lower and sent stocks tumbling, with the Dow Jones Industrial Average falling 1.4% over the course of the day. Shares of the big three American automakers were particularly hard hit — Fiat Chrysler stock fell 5.8%, General Motors fell 4.25%, and Ford fell 2.3%. In Mexico, the peso tumbled 2% against the U.S. dollar.
Former Mexican President Vicente Fox told me, “Trump has a dangerous mindset, and these tariffs will affect tens of thousands of jobs for U.S. workers, and further alienate the U.S. from their economic partners.” He noted that, “the big three, General Motors, Ford and Fiat Chrysler, all have large production sites in Mexico.”
By invoking the 1977 International Emergency Economic Powers Act, which grants the president authority over commerce during a national emergency, Trump can impose sanctions like tariffs on goods coming from Mexico. Doing this, however, would lump Mexico (our friend, neighbor, and trade ally) in with dictatorial enemies such as Iran, Venezuela, and North Korea.
Trump’s trade war with Mexico also threatens passage of the United States-Mexico-Canada Agreement. For all of the rhetoric coming from the White House, NAFTA was actually a miracle. It wasn’t a perfect agreement, and it certainly needed to be revised, but according to the U.S. Chamber of Commerce, NAFTA supports 14 million jobs for U.S. workers. According to the Office of the U.S. Trade Representative, more than $583 billion is traded each year with Mexico. That’s $1 million every minute in trade going back and forth between our two economies.
On the issue of illegal immigration, Fox told me:
Every country has the right to protect and secure its borders, but demanding that Mexico pay for a wall is outrageous. Illegal immigration is an issue that the U.S. has failed to properly address in the past, and as a result, people are still crossing the border. The people that are crossing the border are not Mexicans, they are Guatemalans and Hondurans.
Fox said that if Trump is serious about addressing border security, then he should focus on Central America. “The solution to immigration and the problems around the border is not building a wall and picking a fight with Mexico. It’s going to the source of the problem, it’s going to Central America and developing economic opportunities for Central Americans.”
A trade war with Mexico will hurt our economies, it will hurt hard-working people, and it will tarnish a friendship and partnership that has endured for decades. And rather than point the finger at Mexico for America’s illegal immigration problem, lets do what we’ve always done — collaborate and share resources. The future of our children and grandchildren depend on it.
Mark Vargas (@MarkAVargas) is a tech entrepreneur, political adviser, and contributor to the Washington Examiner’s Beltway Confidential blog.
