On Thursday night, President Trump followed through with his threat to go after Mexico because of the illegal immigration overflow they have been sending us through the United States-Mexico border.
President Trump told the country that starting June 10th, America will impose 5% tariff that will increase over time until illegal immigrants crossing into our country slows down to a stop.
….at which time the Tariffs will be removed. Details from the White House to follow.
— Donald J. Trump (@realDonaldTrump) May 30, 2019
“Mexico’s passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States. Mexico has very strong immigration laws and could easily halt the illegal flow of migrants, including by returning them to their home countries. Additionally, Mexico could quickly and easily stop illegal aliens from coming through its southern border with Guatemala,” Trump’s statement said.
Trump said he will impose the tariffs by using his powers in the International Emergency Economic Powers Act. He also said companies who relocate to the United States will not have to pay the tariffs.
“As President of the United States, my highest duty is the defense of the country and its citizens. A nation without borders is not a nation at all. I will not stand by and allow our sovereignty to be eroded, our laws to be trampled, or our borders to be disrespected anymore,” Trump concluded. [Washington Examiner]
President Trump is playing a more in-depth game here. Not only is he imposing tariffs but is doing so in a reasonably unpredictable manner. That has an impact way out of proportion to the tariffs themselves because it creates severe uncertainty about the cost of using foreign supply chains.
CEOs cannot be sure they will get to keep the benefits of substituting cheap foreign labor at the cost of American jobs when tariffs could go up radically at any moment. This adds greatly to the cost of anyone whose business model its to produce in China or Mexico and sell in the US. It’s just one more factor to consider for those thinking of going offshore, and that choice now looks a lot less attractive.
Trump’s goals are good, but I don’t know if tariffs are the way to get them. I recently read that such selective tariffs are banned by the WTO, which would make it even easier for judge-shopping leftists to find someone in black robes to halt them. If the law would allow Trump to tax remittances back to Mexico, that would probably be more effective.
It’s too bad Congress refuses to do their job and change some of our ridiculous laws as millions of Americans lose a good part of their retirement savings in their 401s. It’s ok congress; you have benefits no one else gets.