So you’ve probably heard by now that Donald Trump threatened Mexico with increasingly heavy tariffs unless they started taking the illegal immigration problem a lot more seriously. Instead of being a “pass through” country, Mexico now is deploying National Guard troops to it’s southern border to not allow the caravans into their country. They’ve arrested one of the two men that have been organizing these caravans since 2005.
The over-riding problem is that people from the northern triangle of countries in Central America are claiming asylum when they get to the US border, but they are unaware of the law that says they can’t do that. If you’re fleeing country and are claiming asylum, you can ONLY do so in the first country you come to that’s not the country you’re fleeing from. So, if a group of people are fleeing Guatemala for instance, and they get to Mexico, they have to, by international law, ask for asylum in Mexico. That fact alone should deny them ever getting asylum in the United States.
Well, because of Mexico not really helping in this situation, Donald Trump decided that starting tomorrow, he’d impose a 5% tariff on all goods coming out of Mexico. It would go to 10% on July 1st, and would work it’s way up to 25% if the Mexicans really got stubborn about it. That would pretty much ruin their economy.
Just like the European Union, which earlier struck a much more fair deal with the US in trade, when threatened with tariffs, the Mexicans decided it wasn’t going to be such a nice thing to have their economy go into the tank. So, like the EU before them, Mexico caved.
I guess my point here is that tariffs can be harmful both short and long term to both countries that are implementing them, and countries having to pay the freight. But what really works is the fear of tariffs. Countries don’t want to deal with it, and it works. The more logical countries who realize they have something to lose, will almost always back down. That’s what happened in this case, and hopefully, we’re finally going to get some help from our neighbors to the south when it comes to getting these illegal immigrants taken care of.
On the other hand, when there are two or more countries that feel they can ride out the storm, like the US and China, it could be critical to both economies. The question then becomes, who has the stronger economy. While China is projected to grow by 6.2% this year…much faster than the US, they are also much more fragile. And with the trade imbalance favoring the East in this case, it would hurt the Chinese a lot more. Oh, I’m not saying it won’t hurt us. But it will crater their economy!
And so, I have a hard time listening to the mamby-pamby representatives (on both sides of the aisle) in DC who are afraid to play hardball when it comes to global politics. Look, if you want to go to the top of your profession, you have to learn to sometimes play hardball. And it appears that people in DC that make our laws are very skittish about such things. That’s because they aren’t really at the top of their game, and they really aren’t very skilled at their jobs. That’s why they should ALL be replaced!
In the end, tariffs, or rather the threat of tariffs DO work. You just have to be willing to play a little hardball. But isn’t that what we elect our presidents to do from time to time?
Carry on world…you’re dismissed!