Of course it will increase the cost of Mexican imports to the USA. That is how tariffs increase domestic demand. It also generates revenue, in fact is was largely how the federal government generated revenue right up until 1913 when we implemented the income tax. All tax is a drag but tariffs place some of that drag on foreigners. Its not like we are pushing tariffs just for the sake of imposing tariffs, the idea was to impose tariffs to pay for the wall. And that is how we get Mexico to pay for the wall, sure they won’t be the only people paying for the wall but they will be subsidizing the wall.
We were talking about a trade war. And in a trade war with Mexico, we barely feel it and Mexico’s economy gets crushed. Mexico doesn’t start a trade war with us over a 10% tariff. They suck it up and curse and yell and scream and lower their prices to absorb some of the impact of tariffs on their consumers.
China? Really? Their main exports are cars, car parts, televisions, computers and oil. And in the aggregate, they don’t sell us a lot of oil. So which of those things that China makes cheaper and better does Mexico sell to China? Starting a trade war with us would cost them 5-10% of their economy in the short term. That’s a recession.
We’re not, as long as they don’t retaliate to our tariff, they take a hit and that’s the end of it.
If they can get the Dream Act without giving up anything they weren’t already willing to give up for it, that’s great. I think the wall is a huge waste of money but I am willing to waste a little money to get through this presidency.
I don’t think he was EVER pressing my proposal (tariff t get Mexico to pay for the wall). I don’t want the wall but if I was Trump I would try to trade DACA for the wall or something that would look like more of a win to my base.
I think that’s probably right. Some people can’t see straight when Trump is involved. I couldn’t see straight until about February.
So can the flavor of “Free Trade” pushed by multinational corporations.
Well if we 're talking about protectionism generally, I would throw currency manipulation into the mix as well.
I don’t think we can pull ourselves ahead with protectionism (although we are well positioned to enter into tit for tat if someone tries to engage in protectionism against us). But I think that Trump could claim that he got Mexico to pay for the wall if he paid for it with a tariff on Mexican imports. To get the3 DREAM Act, I think I would give up on the wall, its giving up a stupid symbol in exchange for 800,000 lives. I probably would resist the tariff tbh.
I didn’t say there would be no price effect on the US side. in fact the increase in Domestic production probably wouldn’t happen unless there were an increase in the cost of Mexican goods.
The point of protectionism is to give your domestic producers at a competitive advantage over foreign producers.
And yes, Mexico will suck up some of the cost of the tariffs. Its just how the supply demand curve works. As the tariff increases the cost of Mexican products the demand will drop and you will get fewer Mexican producers selling to the US at lower prices. Its kind of how the supply and demand curve reacts to tariffs.
Yes but not 10% more. Mexican producers eat part of that.
Or people are shrinking their profit margins. Consumers might lose but their incomes might rise.
Why aren’t they doing that already?
Because they would already be doing that if that was an option. I’m not sure if you’re talking about a trade war scenario or a 10% tariff scenario anymore.
Wait. We import things from Mexico that we ALSO produce domestically. Like cars. How do you figure we can’t compete on a product that we are already competing in?
Because, once again, if they could sell to those countries, they would already be doing it and increasing their overall production and exports, its not like they’re churning along at full employment and can’t produce any more than they do right now. If they were, they would be trying to deport Americans from Mexico.
The USA can ask the Federal Reserve to create some new monies for the project. I’m not sure how you even can “waste money” at this level. But, in Texas at least, it’s a waste of high-value productive land. Of that there is a limited supply.
It seems that Damuri Ajashi doesn’t realize that many of our exports to the USA are produced in USA owned factories, largely the auto industry. So he may want to take that under consideration when vehicles built here for your car companies suddenly become 10% more expensive and they lose customers to automakers from Asia and Europe. Or will Ford or GM be able to absorb much of the 10% he feels Mexican businesses will absorb in order to compete? We import a very large amount of auto parts from the USA, if demand for autos built here due to a tariff decreases, where will the American companies sell their parts? The poster seems to have simple answers for complex issues. But it really isn’t quite so easy.
Trump promised we will pay. The only people that believe him are incredibly stupid.
I’m sorry, I realized today that I’ve been conceding the false identities in the very premise of this policy proposal.
It has sounded like the xenophobic camp Trump plays to wants to punish “Mexico” for Mexican migrants into the USA. So they want a wall (on USA soil) and a tariff against Mexican imports. That’s confused all around. The migrant workers, the Mexican government, and manufacturers in Mexico are three different categories of person. Trump talks like they’re all one organization that he can “punish” with a wall (again, on our soil, not theirs) and tariffs.
We’ve been trying to explain that tariffs are just a domestic tax. Maybe they hit Mexican businesses; but not that much. Even if they did “punish” the owner and workers of a factory in Sonora, they don’t “punish” the government, and they don’t “punish” the migrants.
Now, maybe it’s not really about immigration, despite the rhetoric. What if you want to “punish” an employer who moved his factory to Mexico? Well, you’re “punishing” (ostensibly) all the native Mexican businesses that did no such thing, for no fault of their own.
Meanwhile, the business that moved to Mexico can relocate again to Jamaica or Colombia. What was gained? There is no serious protectionist régime that targets only one foreign country. This whole proposal is a joke.
Well, yeah, but I’m saying at that level money can practically be printed. In theory, the Fed could create helicopter money to subsidize the increased taxes to pay for the wall; not that they would. In any case, a giant wall across one of the world’s hotter deserts and down through prime agricultural land would be a sort of Keynesian stimulus, albeit a stupid, destructive, and presumably deadly one. Losing money on it, as such, is not the concern.
See my explanation above. But I believe those arguing against Damuri Ajashi are tending to be more simplistic than he. Most of the counter arguments leveled against DA IMO either
a) set the goal posts as only Mexico pays as a result of an X% tariff levied for the ostensible purpose of ‘Mexico pays for THE WALL’. I think your comments, though correct more than not as far as they go, fall in this category. or
b) seem to believe the incidence of an X% tariff would be 100% on US consumers and 0% on anybody in Mexico at all. That’s unlikely to be correct.
Trump might at least symbolically/metaphorically be saying a) (but take Trump seriously not literally remains good advice in general IMO). But I’ve read DA’s comments as more subtly pushing back on the idea many posters seem to hold that such punitive tariffs wouldn’t in any sense accomplish ‘Mexico pays’. He hasn’t denied US consumers, or investors (as you suggest) would also pay.
I take it DA is less free trade oriented than I am generally (putting scare quotes around the term free trade is usually a giveaway on that ) Scare quotes aren’t needed because nobody who is realistic expects 100% free trade all the time, or claims free trade helps everyone all the time with no losers ever. It’s just that in general it helps more than it hurts, and politically driven protectionist policies are as a rule disproportionately expensive and counter productive. Especially in the context of relatively advanced economies which would include Mexico’s level as well as the US.
However again I think DA makes a good point that if a punitive tariff on Mexico over illegal immigration from (or now more often through by third country nationals) Mexico to the US, which in some sense is what this comes down to, were not making ‘Mexico pay’ in any sense of the term, that might make it want act more to curb such activity and not just say it’s all the US’s problem, why would anyone in Mexico be against it? Again I didn’t see DA say it wouldn’t cost the US anything. I didn’t see him say that the tariff would cost less to US taxpayers than just making them pay through US federal outlays. I didn’t see him say a wall per se, or anything else even, actually had to be built at all. Again I think the over simple absolutism has tended to be on the other side of the argument.
How should our government “act more to curb” people who have the right to freely transit our country? If you want to stop people from entering your country then simply punish your own citizens that lure them with the opportunity to work. The same goes for drugs. Demand spurs supply. Why doesn’t your government wise up and take find an intelligent way to deal with these problems? After all, both the employers of undocumented workers and drug abusers have a great deal of responsibility for these issues.
Those are your opinions and within reason as far as I’m concerned, not to say I necessarily entirely agree. But it’s somewhat off the original point. The Trumpist view assumes as a central proposition it is partly Mexico’s responsibility to address illegal immigrants and drugs crossing the US border and it hasn’t done so as effectively as it might. Which I don’t think is a wholly unreasonable opinion either.
But the question here is if one takes the position that the drug and illegal immigration problems on the US-Mexico border are partly Mexico’s problem and it hasn’t been doing enough to address them, whether punitive tariff policy by the US could put pressure on Mexico (‘make Mexico pay’) to modify its policies. Many of the posts have IMO over simply and unrealistically quoted free market boilerplate (notably at odds with the general left leaning skepticism about markets on most other issues on this forum) to seem to claim such a policy would not in any way ‘make Mexico pay’, but rather 100% fall on the US. Not so likely. In fact such a policy would in some sense ‘make Mexico pay’. Would it be ultimately successful in creating changes the Trumpists seek? Harder to say. Enough so to offset the other costs to the US? I tend to think not. But it’s not an obvious fact either a) that the cost of such policies would fall 100% on the US or b) Mexico is doing everything any country could be expected to do to address the underlying illegal immigrant and drug export/re-export from Mexico problem, and those are instead 100% the US’s problem.
As Ravenman points out, this isn’t the way it works. The FRB injects money legally (quantitative easing) in response to the economy (i.e. unemployment), not Presidential wishes. With the economy doing well, FRB-held treasury debt has held steady since Fall 2014; they’ve announced plans to start selling this debt.
OTOH, I think there are already three vacancies on the Federal Reserve Board, and another 2 or 3 terms set to expire in 2018. Heaven knows what the FRB will look like when the Orange Clown and his enablers fill those vacancies.
$6.3 trillion of U.S. treasury is held by foreigners, including Mexicans. Perhaps that’s what Trump meant by “Mexico will finance the Wall.” At the last Treasury report, Mexico owns $32.3 billion of U.S. Treasury debt. (As recently as this February that total was $49.5. What’s the reason for this sudden liquidation? )
Are you talking about Maquiladoras? Maquiladoras are tariff free zones. They are free from MEXICAN tariffs because anything produced there is solely for export back to the USA and not for domestic consumption within Mexico.
You think all those jobs making Chrylsers in Mexico are going to vanish into thin air, and be replaced by more jobs in Korea making Hyundais? Then why do we make any cars here at all? Hell the why does Hyundai build factories and make cars here in Alabama?
Politically driven “free trade” (scary quote) can also be exceedingly expensive and counter productive.
Every other country sends their best economists and businessmen to negotiate trade deals with us, we send our best lawyers (as in litigators) and diplomats. Our economists generally push more open borders even if we open our doors more than the other guy on the theory that everything tends to even out in the end. I suspect that China will show us exactly how you exit a protectionist policy without watching the trade balance reverse itself.
Who said anything about maquiladoras? And don’t you think it is a bit arrogant to explain a Mexican on what is what in our own country? What do the call it in the US when men talk down to women? Mansplaining or something like that? Should we call this gringosplaining?
The second part of your post makes absolutely no sense. The American automakers in Mexico must turn a profit for their owners or they wouldn’t be here. Obviously the vehicles leaving plants here are cheaper than what they can be built for in your country. I am not sure of the economics of why Hyundai or any other Asian maker builds vehicles in the US but I would think transportation costs from Asia to N. America play a big role.
) Scare quotes aren’t needed because nobody who is realistic expects 100% free trade all the time, or claims free trade helps everyone all the time with no losers ever. It’s just that in general it helps more than it hurts, and politically driven protectionist policies are as a rule disproportionately expensive and counter productive. Especially in the context of relatively advanced economies which would include Mexico’s level as well as the US.