Here’s How Mexico Could Respond To Trump’s Tariff Threat

Michael Bastasch | Energy Editor

  • Experts expect Mexico to respond to U.S. tariff threats, but the country’s reliance on American energy could influence how they respond.
  • Mexico could slow-walk the U.S.-Mexico-Canada Agreement that President Donald Trump wants to replace the North American Free Trade Agreement with.
  • The U.S. will soon impose gradually rising tariffs on all Mexican goods until its southern neighbor cracks down on illegal immigration.

Mexico is expected to respond to President Donald Trump’s new tariff threat, but the country’s reliance on U.S. energy imports could influence how aggressively they push back.

“[W]e do not expect tonight’s tariffs to go wholly unanswered,” according to an email from market analysts at ClearView Energy.

Trump announced 5 percent tariffs on all goods from Mexico on Thursday until the country helps stem the flow of illegal immigrants. Trump said tariffs would go into effect June 10 and increase 5 percent a month until they hit 25 percent in October.

“We would not rule out Mexican retaliation against the tariffs, but we would not necessarily expect uniform, reciprocal reprisals, either,” ClearView analysts wrote, noting that Mexico’s reliance on U.S. energy could somewhat blunt their response.

“Instead, Mexico could opt to slow-walk ratification of the U.S. Mexico Canada Agreement (USMCA, the successor to the North American Free Trade Agreement, NAFTA) either as an outright alternative to reciprocal tariffs, or in conjunction with a subset of reciprocal tariffs that might exclude U.S. natural gas and products exports,” ClearView experts wrote.

U.S. President Trump attends U.S. Air Force Academy's graduation ceremony in Colorado Springs, Colorado
U.S. President Donald Trump talks with a graduating cadet while participating in the U.S. Air Force Academy’s graduation ceremony in Colorado Springs, Colorado, U.S., May 30, 2019. REUTERS/Jonathan Ernst.

White House Chief of staff Mick Mulvaney, however, dismissed concerns that tariffs would imperil the USMCA. Mulvaney said immigration-based tariffs were “separate” from the USMCA.”

Mexican President Andrés Manuel López Obrador responded to Trump’s tariff threat Thursday night in a letter deriding the decision. The Mexican president also said his administration was doing all it could to stem the flow of Central American migrants.

López Obrador also told Trump to “please, remember that I do not lack valor, that I am not a coward nor timorous but rather act according to principles.” Mexico will send a delegation to the U.S. to negotiate with the White House. (RELATED: China’s Latest Trade Threat Reignites Concerns Over US Mineral Dependency)

Mexico is looking to end its reliance on U.S. hydrocarbons, but that’s not going to happen in the short-term. The U.S. has an overall trade deficit with Mexico, except when it comes to oil and natural gas.

Oil and gas accounted for 12 percent of the value of U.S. exports to Mexico and 5 percent of imports, according to the U.S. Energy Information Administration (EIA). The U.S. historically imports Mexican extra heavy crude oil, but exports higher-value petroleum products and natural gas.

Source: U.S. Energy Information Administration, based on U.S. Census Bureau data
Source: U.S. Energy Information Administration, based on U.S. Census Bureau data
Source: U.S. Energy Information Administration, based on U.S. Census Bureau data
Source: U.S. Energy Information Administration, based on U.S. Census Bureau data

The Trump administration recently lifted steel and aluminum tariffs on Canada and Mexico provided they prevent subsidized Chinese steel from entering U.S. markets. The move was seen as a positive step in USMCA negotiations.

Experts are concerned a new round of immigration-based tariffs could derail USMCA progress. Market analysts also see some trouble ahead for refiners who now face higher costs in getting extra heavy Mexican crude.

“Given heavy crude scarcity in the wake of Venezuelan production declines, U.S. refiners may not be able to readily source alternative supplies,” ClearView analysts wrote. “As a result, 5% tariff may not be enough to deter Maya purchases, thereby implying as much as 0.695% of extra-heavy crude cost inflation based on current Mexican market share.”

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Sweet Old Bob
June 1, 2019 6:18 pm

Don’t think AMLO is stupid .
Likely will stop the immigrant flow “due to stresses on our economy due to conditions beyond our control, not because of the tariffs ” ….
or some such nonsense .

Reply to  Sweet Old Bob
June 2, 2019 6:50 am

Mexico, according to various reports, have enlisted the Chamber of Commerce to wage a fear campaign/smear against Trump’s economic moves. Imagine that – the billionaires don’t like their monopolies impacted.
Then, don’t forget, Trump can simply impose restrictions on US dollars flowing back to MX from all the illegals and legals that send money to their relatives and BFF in MX.
The short story is whether the Left’s propaganda machine will win before Mexico’s economy simple goes the way of VZ.

Reply to  Sweet Old Bob
June 2, 2019 10:29 am

I give Trump all the credit in the world for trying, because it seems no one else will. If this doesn’t constitute a real national emergency, then I’d have to admit I don’t really understand the word. I dislike the man’s personality, but my vote for him in 2020 will be an easy call.

Juan Slayton
June 1, 2019 6:36 pm

Mexico has a strong incentive not to try too hard to discourage their own citizens from travelling north. Remittances to family and friends back home came to more than $33,000,000,000 last year, mostly from the US. That’s real money being drained from our economy, and while we hope it does some real good for the recipients, who generally need it, I don’t think we should necessarily ignore it. Perhaps it would make more sense to discourage illegal immigration by restricting remittances, rather than messing up international trade with hostile tariffs.

Reply to  Juan Slayton
June 1, 2019 7:17 pm

Mexico benefits far more from trade with the US than the US benefits from trade with Mexico. This is why they’re freaking out about small tariffs. Even adding 5% to the cost of a car imported from Mexico may be enough to justify moving production back to the US.

You’re right that remittances would be the ideal solution, but that, I believe, would require Congress to change the law, and that’s never going to happen. That said, Trump could just station immigration officials outside every Western Union office and check for illegals, but the media would whine for weeks if he did so.

And if it affects USMCA, it might mean Mr Dress-Up has to put on a sombrero and head to Mexico to try to convince them to go along so Canada can get its deal.

Reply to  MarkG
June 3, 2019 1:54 am

The threat to USMCA is a red herring. NAFTA is dead and buried as long as Trump is president. No USMCA means reversion to pre NAFTA. That is the leverage Trump holds nobody in the resistance wants to talk about.

Reply to  Juan Slayton
June 1, 2019 7:30 pm

A 50% tax on remittances would both discourage them and keep some of that money in the US.

Reply to  icisil
June 2, 2019 8:10 am

For some people, the answer to every problem is to take money from other people.

Reply to  MarkW
June 2, 2019 9:40 am

Mark, how many asylums seekers can we send to your house? They will need food, housing, medical, and $10k per year for schooling if school age. They will likely need this for 10 years, plus you will need to make room for all the relatives who will visit and stay. Time to put up.

John Endicott
Reply to  DayHay
June 3, 2019 6:07 am

DayHay, being against raising taxes on other people does not mean one is for illegal immigration.

Bryan A
Reply to  icisil
June 2, 2019 8:49 am

I was just thinking similarly…a 50% fee on wire transfers from U.S. to Mexico could eliminate what could truly be seen as the United States greatest export south, greenbacks.

Reply to  Bryan A
June 2, 2019 10:20 am

Make them hand carry it to the border, then stop them and make them convert it to pesos at a ruinous conversion rate and then hand it over to their “relatives”.

Reply to  Juan Slayton
June 1, 2019 7:38 pm

My proposal some years ago was to tax these transfers, and use the money to pay for the wall. Don’t know why some things are never even proposed, much less acted on. And regardless of what you think about it, it’s a saner proposal than A O-C’s GND.

Mark Luhman
Reply to  jtom
June 1, 2019 8:11 pm

A Republican congress man had such a bill all written last congress wanting to get it on the floor, speaker of the house Paul Ryan made sure it did not get considered. As long as we have RINOs and Demorats in congress we can expect no bill other than complete amnesty addressing the problems of illegal immigration. Let alone moving to a merit based legal immigration system.

Reply to  Juan Slayton
June 1, 2019 7:40 pm

Restricting remittances will just make people move it to bitcoin or cryptocurrency. That is already taking a significant load.

Reply to  xenomoly
June 2, 2019 8:11 am

Or just send it through the mail.
Or give it to friends to hand carry over the border.

Russ Wood
Reply to  MarkW
June 4, 2019 9:13 am

“hand carry over the border”. That’s already happening at the South Africa/Zimbabwe border. Zim money is rapidly becoming worthless – again! (Remember the 50 million Zim Dollar notes that couldn’t even buy toilet paper?) People in Zimbabwe haven’t got food, can’t even get their decreasing value dollars in cash from the banks, and what food is available needs to be paid for in a stable currency. So – SA Rands go across, and the ‘food smugglers’ do a roaring business getting food across the border without being confiscated.
But then, Zim is a ‘failed s*hole nation’ and I doubt if Mexico is anywhere NEAR that yet!

Reply to  Russ Wood
June 4, 2019 4:41 pm

Oh, Mexico is plummeting down the Zimbabwe hole just as fast as they can. Venezuela has them beat, but they still have their victim status aspirations.

Sky King
Reply to  Juan Slayton
June 2, 2019 3:08 pm

I am behind Trump 200% on all things immigration, including shutting off remittances. But as to draining $33billion from the US, what becomes of those dollars once in Mexico? Do they just burn them?

Reply to  Sky King
June 2, 2019 10:28 pm

Interesting comment. Yes Mexicans probably buy American goods with the “trade surplus* However this is not always the case any more. China tends to buy American companies now and dismantle them and move them to China. That isn’t exactly a win unless the USA is growing so lightning fast it doesn’t matter. I don’t think we have grown at that lightning speed required since the early 1960’s

J Mac
June 1, 2019 6:40 pm

A neighboring country that floods the USA with illegal drugs, illegal aliens, and supports human trafficking of women and children for perverse predators is an enemy, not a friend. If the Mexican government will not act to stop this human tragedy, we must. If Mexico chooses to ‘retaliate’ for their obscene corruption, so be it. We must be true to our national ethos.

Tom Abbott
Reply to  J Mac
June 2, 2019 6:04 am

“A neighboring country that floods the USA with illegal drugs, illegal aliens, and supports human trafficking of women and children for perverse predators is an enemy, not a friend.”

That’s exactly right!

Mexico’s government if fueling this illegal alien crisis and Trump needs to take steps to stop them from continuing to do so.

Trump also has the legal option to put the U.S. military on the southern border in a law enforcement activity. There is a law on the books that allows the U.S. military to interdict illegal drug activity, including on the southern border.

If Mexico’s government doesn’t see the light on this problem soon, Trump should close down the southern border using the U.S. military and only allow crossborder traffic through established entry points.

Mexico’s government has been taking advantage of the U.S. for decades and receives lots of money in their country from the U.S., and now they are encouraging hundreds of thousands of illegal aliens to use their country to enter the United States illeglly. This has to be stopped one way or another, and it won’t wait until the 2020 elections. Mexico’s officials should not place their hopes in Democrats being able to oust Trump. Trump is going to be here through 2024 and his attitude towards illegal aliens unlawfully entering the U.S. is not going to change. Go along or Trump is going to run over you.

Christopher Chantrill
Reply to  Tom Abbott
June 2, 2019 9:45 am

“Trump also has the legal option to put the U.S. military on the southern border in a law enforcement activity.”


Reply to  Christopher Chantrill
June 2, 2019 10:25 am

No, not “law enforcement”, military can be used to secure the border, not to enforce laws in US. THAT is what Posse Comitatus is about. Military can not be used as cops IN US against US citizens. One reason a standing army was created was to secure our national borders. Please don’t get your information from wiki, try reading the actual founding documents instead.

Sky King
Reply to  Christopher Chantrill
June 2, 2019 3:01 pm

What if a foreign army is moving to cross the southern border. Are you saying that US armed forces cannot move south to the border to defend the US?

Reply to  Sky King
June 4, 2019 6:20 am

Already cleared this up for him. Posse Comitatus is about not using US military as law enforcement against US citizens. Securing US national borders falls fully within the scope of US military mission.

June 1, 2019 7:11 pm

Heavy crude? Currently, Alberta sells its heavy crude at a deep discount. I’m pretty sure it’s capable of picking up the slack.

Reply to  commieBob
June 2, 2019 12:15 am

… if only Canada could ship the crude across their country …

Craig M Carmichael
Reply to  Kenji
June 2, 2019 5:48 am

Canada was not built for east west movement of goods, all our trade routes go south. BC has much more commerce with the western States than any eastern provinces. Of course we currently have the weakest government of any Western civilization and all bets are off.

June 1, 2019 7:13 pm

I’d tell them: Tariffs and economic pressure are made to make you HURT a little, like we HURT a lot because of your little games. WARNING: WAR (real, gun shooting, brutal) can HURT A LOT MORE. Which do you want!

June 1, 2019 7:18 pm

The question is whether AMLO will blink before Trump. Given the escalating nature of the punitive tariffs, it is more likely that Lopez Obrador will reach some agreement before the tariffs have much of an effect.

June 1, 2019 7:57 pm

AMLO acts according to principle…communist principles, sure. Mexico is a thorn in the side of the USA. I think we should go and finish the job we started in the 1830’s.

Joel O'Bryan
June 1, 2019 8:38 pm

The picture of Trump at USAFA graduation brings back memories.
The Gipper handed me my USAF commission 35 years ago last Wednesday. Nice memory (and a few pictures of it of course).
We gotta win this Climate Hustle propaganda with the socialists and their Green Blob who want to destroy the US and the West.
“Let’s go Win one for the Gipper, one more time. Because we have to.”

(not the original Gipper, but the actor who played him in the 1940 movie Knute Rockne.)

June 1, 2019 8:39 pm

Trump is economically ignorant, tariffs hurt the imposing country’s consumers the most.

Reply to  bobbyv
June 1, 2019 9:31 pm

You mean like when they get their jobs back and actually have some money to spend?

Globalization and free trade are a two edged sword. Any simple mantra is going to be wrong most of the time. link

Given China’s aggressive treatment of anyone who disagrees with it, President Trump’s trade sanctions may be a civilizing influence on it. Trade sanctions as a tool of statecraft may, or may not, be highly effective. There’s a reasonable chance they will be good for America and Americans. The opposite is also true.

Reply to  commieBob
June 1, 2019 10:21 pm

Jobs back? If a factory in China with 10,000 employees closes and moves to the USA they will employ only 500 techs doing maintenance on the robots. Automation is the only way the cost structure works out here. Even in China they are automating to lower costs. Sorry man but jobs are not coming back.

As to what AMLO will do it is very simple. Close the southern border (very small, short border and easy to control). Then work with Trump to handle the northern border.

Mexico is not China. Mexico has no choice. Just my SWAG.

Lee L
Reply to  TRM
June 2, 2019 12:10 am

Well the other reason the jobs are not coming back, at least for some years, is that when the factory moved or was built in China, they didn’t hire American techs, engineers, operator. You might not be able to find 500 American techs depending on how long it has been since an American worked in that factory’s industrial process. Robotics, also, is not easily applied without process specific knowledge usually held in experienced people’s brains. Just ask Elon.

mike the morlock
Reply to  TRM
June 2, 2019 12:44 am

TRM June 1, 2019 at 10:21 pm
Hi, ah how many machine shops have you worked in?

oh yeah also a list of both conventional and cnc would be of great utility that you have run.

Reply to  commieBob
June 2, 2019 1:48 am

If the goal is to create jobs, just outlaw all trade. You’ll create 300 million farming jobs instantly.

Reply to  Bobbyv
June 2, 2019 7:51 am

Yes, and let’s ban any digging tools larger than a tea spoon. sarc

If you abandon self sufficiency in the name of globalism, you are handing China a bloody huge baseball bat with which to bash us about the head and shoulders. China has shown its willingness to use trade to punish those who annoy it.

We should grab back control over our own destiny while we still can.

Reply to  commieBob
June 2, 2019 8:05 am

Self-sufficiency is foolish goal, division of labor and comparative advantage create wealth for all. I don’t want to be a farmer, and we don’t have a collective destiny. is a better platform for this discussion, we should stick to climate here.

Reply to  commieBob
June 2, 2019 10:13 am

bobbyv June 2, 2019 at 8:05 am

… is a better platform for this discussion, we should stick to climate here.

You started it.

bobbyv June 1, 2019 at 8:39 pm

If it were merely a matter of science, CAGW would have been dead and buried a long time ago.

Many of us here have looked for the motivation to continue the hoax and have come to the conclusion that it is political.

The other thing at play is that we spend a lot of time dissecting the very bad economies of renewable energy.

Understanding CAGW involves a lot of things besides science.

Reply to  commieBob
June 2, 2019 10:17 am

Yep, if you are discussing Man Caused Globall Warmining it is all political. Except for the religious hysteria that has been injected to stir up feelings of terror and helplessness in people. Oh, yea, thats political, too.

Reply to  commieBob
June 2, 2019 8:14 am

For every person who gains a job because of tarrifs, there is at least one other person who loses a job because of tarrifs.
What happens to the jobs of people when the stuff they make gets more expensive because of tarrifs?

Reply to  MarkW
June 2, 2019 10:20 am

Do you have a link with some data to support your 1:1 ratio?

Economics is complicated. As such, blanket statements are dangerous.

John Endicott
Reply to  commieBob
June 3, 2019 6:25 am

Bob, it’s a generalization not meant to be taken as a literal 1:1 ratio. The point, as should be obvious, is that tariff “damage” is a two-way street. Yes, tariffs “hurt” the imposing country’s consumers (by raising prices of goods and services from that particular source), but it also “hurts” the country’s exporters that the tariff’s are being imposed upon (again by raising the prices of their goods and services thus driving away business). As a result some jobs are created (as consumers shift to buying from other sources that are not subject to the tariffs, thus generating job opportunities for those other sources) and some jobs are lost (as the exporters lose business, they need less employees). Which side ultimately gets hurt the worst isn’t easy to predict, though generally the customer (in the case of US-China trade, that would be the US as we buy more from them than they buy from us) has the advantage. The customer can more easily shop around elsewhere for an equivalent replacement and thus mitigate the increased cost of doing business with the entity that the tariff is being imposed upon, whereas the seller has a harder time finding a replacement buyer (we’re one of, if not the, biggest customers China has. Good luck finding someone else to buy as much as we were from them).

Kyle in Upstate NY
Reply to  MarkW
June 2, 2019 7:56 pm

Free trade is great, but we have not had some happy free trade relationship with the rest of the world that Trump is violating by starting a trade war. Trump did not start any trade war. The other countries, in particular the Chinese, have been engaging in one against the U.S. for years now, and in the case of the Chinese, it has impacts on our national security regarding the steel and aluminum industries. Trump is simply responding to the trade war actions that these other countries have been engaging in. Yes, trade restrictions can hurt economically, but it depends on the size and strength of the economy and the size of the trade restrictions. The U.S. economy has thus far been handling the trade restrictions on China rather well, although certain farmers unfortunately are being hurt.

There is a limit though and I am not sure if doing it to Mexico is a good idea economically. But if the U.S. economy can absorb it overall fine and it muscles Mexico to crack down on illegal immigration, then good. Trump I hope proceeds carefully though.

John Endicott
Reply to  Kyle in Upstate NY
June 3, 2019 6:38 am

Like or hate Trumps tariff actions, he’s picked a good time to do it. The US economy is booming which gives him some room to maneuver in regards to imposing actions (like tariffs) that will do some short-term economic damage in hopes of making long term gains (ie better trade deals with the Chinese, mitigation of the immigration crisis on the Mexican border, etc). My 401K hasn’t been too happy the past couple of weeks, but it’s still up considerably since Trump was sworn in, even if it ends up loosing all it’s gained since Trump won, it’ll be worth it if he manages to succeed in better trade with China and getting Mexico to stem the flow of illegals across our border.

J Mac
Reply to  Kyle in Upstate NY
June 3, 2019 8:39 pm

Just so, John Endicott!

Paul Penrose
Reply to  bobbyv
June 3, 2019 9:56 am

Even if you are right (which you aren’t), sometimes short term pain can result in long term gain. International trade is an enormously complex subject, and simple thinking like yours is insufficient to understand it. Whatever our President’s faults are, he is not an imbecile.

Reply to  Paul Penrose
June 3, 2019 10:05 am

Paul, he’s not an imbecile, but he is economically ignorant – he goes against 250+ years of study since Adam Smith. Tariffs make everyone worse off, and are the blunt instruments of cronies. As Bastiat says, “Tariffs are legal plunder.”

Flight Level
June 1, 2019 10:54 pm

On the other end of the pond we have quite some issues:
or even

I am conscient that everyone is entitled to a better life. That includes us as well.

I mean face it, every time I spool up, I have a stressful taught. What if… What if weather and technicalities were not the only things we have to worry on this leg ?

What if that armored door came to serve it’s purpose? What if… *palmface*

Yes, it’s true that not everyone is intrinsically bad but the complementary, that everyone is good, is false.

Ben Vorlich
June 2, 2019 4:00 am

If tariffs, aka import taxes, are put in place because imported goods are cheaper, for whatever reason, than home produced equivalent then it doesn’t actually reduce the cost of anything in the home country. For example US steel is 20% more expensive than imported putting ac25% tax on the imports means that US steel will be lower cost but its cost hasn’t fallen it’s just imported steel is now 25% more expensive. So anything using steel has now seen the cost of a raw material rise by 20+%. This feeds through to all products contain steel, initially good for US steel producers but longer term demand more expensive goods falls and inflation rises. To counter rising inflation interest rates rise and money for new goods contain steel falls. In the mean time the opposition puts tariffs on US goods and companies and the world trade declines.

Everyone loses.

Or have I got that wrong.?

Crispin in Waterloo but really in San Francisco
Reply to  Ben Vorlich
June 2, 2019 11:26 am

Ben V

The only missing part is what’s happening at the other end. Many countries apply tariffs on US (and other country) goods, but have been permitted to sell in the US duty-free. Basically Trump says enough of that. We should have a level playing field.

The import 5% is punishment for something and it is an unusual step. It is an economic sanction and can go very wrong in the right circumstances. Usually pressure is via some “related mechanism”. Import duties have nothing to do with blocking movements of people in the country legally with transit visas.

Mexico is already allocating major money to dealing with the slow collapse of living conditions in Central America. It’s a good idea but corruption and gangs can wreck a lot of good intentions.

More than one and a half billion people in the world would leave the country they are in to go somewhere else, if they could. Clearly this is not just a problem in one region.

Reply to  Ben Vorlich
June 2, 2019 12:08 pm

Or have I got that wrong.?“. I think that everything you say is correct, but that you have still got it wrong. I happily admit that I’m no sort of expert on this so I might be the one who is wrong, but ….. I think you have addressed only one side of the equation. A bit like looking at costs but ignoring benefits. Yes, tariffs put up the price of steel, and on the face of it there is a direct net loss to the economy. But what about the indirect cost/benefits, what about the economic shock of the steel industry collapsing, what about the rate of change stressing the economy, what if the Chinese are actually making a loss on their steel in order to eliminate competition, and in any case what will the cost of Chinese steel be after the US steel industry has ended?

And perhaps most important of all: China cannot be regarded as any kind of benign entity now that Xi Jinping is emperor for life. I suggest that the only sensible attitude is to regard China as a toxic enemy for as long as Xi is in control.

John Endicott
Reply to  Mike Jonas
June 3, 2019 7:21 am

well said Mike.

Kyle in Upstate NY
Reply to  Ben Vorlich
June 2, 2019 7:46 pm

Tariffs for U.S. steel and aluminum are because these are vital industries for national security purposes, so large tariffs can be justified, along with subsidies if needed. The Chinese we know have been actively trying to destroy the U.S. steel and aluminum industries for this reason, so as to make the U.S. a lot more reliable on them.

Reply to  Ben Vorlich
June 2, 2019 10:46 pm

Let’s say you have a hammer factory 100% US sourced. All the money generated stays in the US to the tune of $100 million. Management shuts down the factory because it can the sell hammers for $9.50 instead of $10 but then sends 2/3 of the dollars to China. Assuming those workers have difficulty updating their skills and the suppliers have trouble finding new customers – how many more hammers have to be sold to recover the $66 million now shipped overseas and to cover the additional welfare costs for the unemployed? This is a net loss unless everyone can find a new job – which can only happen in a really fast economy. There is a reason we have rust belt cities with massive unemployment and despondent people hooked on drugs.

Granted if hammers could be sold for $1 instead of $10 maybe the extra utility of the extrA hammers we would buy would make up the difference but this is not Always the case.
When I get my hammer for 50¢ less but my neighbor can no longer do business with me and I have to pay even more to support his unemployment I lose much more than the 50¢ I gained.

I am sure there are formulas to figure break even points and how much growth we would need to cover the loss. Callously telling hammer makers to “learn to code” is not the answer.

John Endicott
Reply to  Ben Vorlich
June 3, 2019 7:18 am

If tariffs, aka import taxes, are put in place because imported goods are cheaper, for whatever reason, than home produced equivalent then it doesn’t actually reduce the cost of anything in the home country.

Yes and no. While it doesn’t immediately change the prices in the home country, it does make the home country goods a more desirable purchased than the foreign goods being tariffed. To borrow your example, if my US company was buying China Steel before tariffs, We’d likely switch to US Steel after tariffs as the US steel is now the cheaper of the two. The effect of my company and others like it buying more US Steel means US Steel makers may need to hire more people in order to meet the increased demand for their product. Economies of scale also mean that US Steel companies might be able to lower their prices somewhat as the demand increases result in them scaling up their supply. That’s a win for US steel and US steel workers. US steel hiring more workers means less unemployment, that’s a win for US taxpayers. On the down side, prices will be higher (not necessarily by the full 25% of the tariff, but by whatever difference is between the pre-tariff Chinese price and the price of the alternate source used to replace purchases of Chinese products) and that can drag on the economy. So there’s winners and losers. In a trade war, the buyer (IE the US, as we buy more from China than they buy from us) tends to have the advantage, as they can more easily purchase from elsewhere (thus mitigating some of the cost of the tariff) whereas the seller (IE China) has a harder time finding alternate buyers for their goods (The US is one of, if not the, biggest customers of Chinese goods. Good luck finding someone else to buy as much as we do from them).

June 2, 2019 4:26 am

Two points to consider. As I understand it, in the USA while its illegal to
enter the US without documentation, it is not illegal to employ them.
So fix that point.

Here in Australia every worker has to have a tax file number for the
employer to deduct the tax from the employees salary. It works.
True we still have illegal “”Sweat shops” always run my their own people.

Second point. Does the USA pay any money to assist Mexico combat the
entry of people into their country, or have the Mexicans simply given up
trying to stop such movement.

One of the original reasons for setting up the Talking shop now called the
UN, was that they could have a international army available to fix problems
occurring in the world.

So do we have problems in South America which have occurred by the
Crooks taking over, that is of course a problem, how do we tell the
difference. But assuming that say a Nazi type group has taken over a
country, then we need a body such as a UN Army to fix the problem.

Come to think of it, I recall a place called North Korea which required a
UN designated military force to fix that particular problem, well sort of.


Reply to  Michael
June 2, 2019 10:48 pm

It is illegal to employ illegals in the US unless they are asylum seekers. The law is widely ignored in blue collar jobs and by rich who want nanny slaves and house servants.

John Endicott
Reply to  Michael
June 3, 2019 6:59 am

Your first point is wrong. In the US it is illegal to hire illegals (see: 8 U.S. Code § 1324a. Unlawful employment of aliens).

As to your second point, last year Trump offered Mexico $20 million to deport central American illegals:

June 2, 2019 4:26 am

And then there is the stop the illegal crossing of the American border, option.

June 2, 2019 7:11 am

No troubles! Simply drop Mexico from the new trade deal, just Canada and US. Next step? Double the amount American companies charge Mexico for the energy they are importing from US. Tell them we can go back to the status quo when they shut off the flow of illegals and drugs. Meanwhile deploy US military to secure southern border, it is one of the Constitutional duties of our military and fully within the authority of the Executive Branch(ie President) and entirely legal. Let Democrat Party and other Amer4ica haters screech&wail all they wish. It is entertaining.

Christopher Chantrill
June 2, 2019 9:52 am

Do tariffs increase atmospheric levels of CO2? Do tariffs increase or decrease GAST? Does this site do politics or does this site do science?

(Does Christopher have a comment about CONTENT of the properly posted article?) SUNMOD

Reply to  Christopher Chantrill
June 2, 2019 10:05 am

If you don’t like the subject of the post why did you come to it? Mr Watts is a highly intelligent man and fully capable of doing more than one thing at a time, perhaps you should learn from his example instead of complaining.

Christopher Chantrill
Reply to  2hotel9
June 2, 2019 4:20 pm

It would have been better for you to answer my questions instead of deflecting, and changing the subject.

Reply to  Christopher Chantrill
June 2, 2019 11:28 pm

To answer your question Christoper…science has become politics, and unfortunately that means that many things must be examined in detail especially politically motivated science decisions. Anyway, as indicated in the About of WUWT, it is whatever interests our host what is published.

John Endicott
Reply to  Christopher Chantrill
June 3, 2019 6:49 am

Chrisopher, had you simple clicked on “about” at the top of the page, you could have found the answer for yourself:

About Watts Up With That? News and commentary on puzzling things in life, nature, science, weather, climate change, technology, and recent news by Anthony Watts

Reply to  Christopher Chantrill
June 4, 2019 6:12 am

The subject is you not liking something on Anthony’s blog, how did I change anything?

John Endicott
Reply to  2hotel9
June 4, 2019 9:34 am

You didn’t. It’s just a concern troll doing what concern trolls do.

Reply to  John Endicott
June 4, 2019 4:39 pm

Ahhhh, I’m disappointed! Was looking forward to a 3-5 paragraph long reply from Christopher ‘splainin’ how it is all my fault. I love those! Copy them and share with all my friends. Both of them. 😉

John Endicott
Reply to  Christopher Chantrill
June 3, 2019 6:47 am

From the about page:

About Watts Up With That? News and commentary on puzzling things in life, nature, science, weather, climate change, technology, and recent news by Anthony Watts

Sky King
June 2, 2019 3:29 pm

I am behind Trump 200% on all things immigration, including shutting off remittances. But as to draining $33billion from the US, what becomes of those dollars once in Mexico? Do they just burn them?

June 2, 2019 9:36 pm

Mexico encourages illegal migration by granting 21 day transit visas:

In correspondence with the Research Directorate, an academic from La Salle University in Mexico City, who is a former researcher of the Center of Migration Studies at INM, provided the following information:

According to the Regulations of the Migration Law (Reglamento de la Ley de Migración), there are two types of exit permit (oficio de salida). 1. Exit permit from the Immigration Detention Center (Estaciones Migratorias) [IDC] and 2. Exit permit from Mexico.

The first one is produced automatically by the [INM] when the maximum allowed time for keeping foreigners in irregular migration status within [IDC] expires, which is 60 working days (Migration Law, Art. 111). There are no further requirements for this exit permit from the IDCs.

The second is issued to foreigners with no proper, valid or outdated identity or travel documents, only if they head to the countries that issued such documents (i.e., if they were heading to Somalia …) and after the proper checks on alerted people lists have been done ([Regulations of the Migration Law], Art. 54).

In case that there is no trustable information about the foreigner’s nationality or identity, or in case of difficulties for obtaining their identity and travel documents, the maximum time of stay of foreigners at the IDC is 60 working days (Migration Law, Art. 111, [para.] I). In such case, the INM must issue documents for their stay in Mexico as visitors with work permit, as long as the causes by which this document was issued prevail (for example, for humanitarian reasons).

In practice, some alleged Somali citizens have arrived to Mexico without proper travel or identity documents, and are presented at some of the IDCs (there are around 50 of them). Since there is no Somali diplomatic representation in Mexico, their very identity or nationality could not be properly established, and when 60 working days have passed, they must be set free from the IDC. In such a case, they get the exit permit from the IDC, and after that they could request their legal stay in Mexico as visitors with work permit.

Typically, the foreigners that obtain [an] exit permit from the IDC do not have reliable documents or they do not have documents at all. … [T]hey usually can get the exit permit from the IDC without providing their identity.

The exit permit from the IDC has immediate effects, and no time limit is applicable.

However, foreigners in this hypothesis have 30 working days to start the regularization process to get their documents as visitors to Mexico with work permit. Past this time, they will get the exit permit from Mexico (but only to be directed to the country that issued their dubious travel or identity documents, according to the Migration Law).

In practice, alleged Somali citizens that receive the exit permit from the IDC do not present themselves to the INM in order to receive the documentation as visitors to Mexico with work permit (for humanitarian reasons). Instead, they typically go to the frontier with the United States and try to cross it without documents in order to ask for asylum there. (Academic 9 Mar. 2018)

Sources report that the INM issues the exit permit free of charge (Milenio 11 Oct. 2016; Cuarto Poder n.d.) to [translation] “men, women and children” (Milenio 11 Oct. 2016). According to Cuarto Poder, a Chiapas newspaper, INM issues the exit permits to foreigners who cannot have their national identity verified due to the lack of consular representation in Mexico (Cuarto Poder n.d.). Media sources mention that people seeking to obtain an exit permit voluntarily entered an immigration detention centre called “Estación Migratoria Siglo XXI” (Cuarto Poder n.d.; El Universal 30 Aug. 2016). According to sources, Estación Migratoria Siglo XXI is located in Tapachula, Chiapas (El Universal 20 Oct. 2017; Global Detention Project n.d.) and operates under the “custodial authority” of the INM (Global Detention Project n.d.).

According to the Mexican newspaper El Universal, the exit permit is issued within 10 to 15 days, while waiting in the immigration detention centre (El Universal 1 Sept. 2016). Corroborating information could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

Sources indicate that the exit permit is valid for 20 days (Milenio 28 Sept. 2016; Cuarto Poder n.d.; UN 6 Mar. 2018) or 21 days (The Guardian 6 Sept. 2016; Insight Crime 12 Sept. 2016). The BBC indicates that the exit permit is valid for 30 days (BBC 11 Mar. 2016).

According to the UNHCR representative in Mexico, the exit permit “gives a person 20 days to leave Mexico, allowing the person to transit through the country within the 20-day period” (UN 6 Mar. 2018). According to The Guardian, the “temporary travel document” allows “Asian and African migrants” to “continue unimpeded to the US border” (The Guardian 6 Sept. 2016). The BBC reports that the exit permit allows migrants to remain in Mexico [translation] “without the risk of being deported while seeking to leave [Mexican] territory” (BBC 11 Mar. 2016). Other sources indicate that the exit permit allows migrants to either regularize their migratory status in Mexico or to leave Mexican territory, within the permit’s validity timeframe (Milenio 11 Oct. 2016; Cuarto Poder n.d.; El Universal 30 Aug. 2016). El Universal indicates that [translation] “any border” can be used to leave Mexico (El Universal 1 Sept. 2016). Further and corroborating information could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

Ben Vorlich
June 3, 2019 1:01 am

Thanks for all replies, I understand the National security issue. Check HMS Illustrious and flight deck armour from Czechoslovakia in WW2 when attacked by Stuka dive bombers.
I also understand the tit for tat application of tariffs, check the still ongoing Chicken Wars.

However isolationism which can result from expanding trade wars is probably the worst possible outcome.

Reply to  Ben Vorlich
June 3, 2019 2:48 am

When you are running a constant and large trade deficit, you can only buy peace for so long until you run out of money and then you can’t defend yourself. Slowing the dissipation of our national wealth is essential. The tariffs so far are fairly mild. There is very little risk of “isolation,” but that depends on how you define it. The President is not waging a trade war for the sake of a trade war. He seeks more equitable trade and that is good public policy. The amount of exaggeration is absurd. He is keenly aware of current trade deficits and where we are running a large trade deficit he is right that it gives us a negotiating advantage. The reduction of trade where we are running trade deficits is beneficial to us in the short term. In the long term, he seeks more balanced trade. He is not against trade, except when it is harming us financially, then trade does not make sense.

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