Friday, June 7, 2019

Trump Should Accept Mexican Concessions To Avert Trade War

In an effort to avert a trade war that could damage the economies of both countries, Mexico is reportedly offering concessions to President Trump. Mr. Trump’s threatened tariffs on Mexico are slated to go into effect on June 10 and would likely provoke a targeted response from our neighbor to the south.

The Washington Post reported on Thursday that Mexico was offering two major concessions to head off a new tariff war. First, the Mexican government offered to deploy 6,000 National Guard troops to its border with Guatemala, a major entry point for Central American migrants on their way to the US.

Second, Mexico is proposing changes to its asylum rules that would allow refugees to be returned to the first nation that they entered after leaving their home country. For example, Guatemalans would typically remain in Mexico while their request for asylum is processed and Salvadorans and Hondurans would have to remain in Guatemala.

Administration officials cautioned that there is currently no deal and cautioned that the concessions might not be sufficient to avoid the trade war. The president has not yet responded to the Mexican offer publicly, but tweeted on Wednesday that talks were progressing “but not nearly enough.”

Vice President Mike Pence told Fox News on Thursday that the US was encouraged by the Mexican proposal, but that tariffs were still scheduled to be implemented on Monday. Fox cited two additional Administration officials who said that reports of an imminent deal were untrue.

In other developments, Mexican security forces intercepted a caravan of about 1,000 Central American migrants and detained more than 400 of the marchers per the AP. The migrants, who said they were fleeing gang violence, extortion, and corruption in Guatemala, Honduras, and El Salvador as well as a severe drought in the region, intended to seek asylum in the US. Reuters also reported that Mexico had frozen the bank accounts of 26 people accused of human trafficking.

As we’ve pointed out before, Trump’s tariffs actually tax American purchasers of imported products, not foreign manufacturers. Although the higher cost of imported goods reduces demand and can eventually hurt foreign companies, Americans bear the brunt of the tax increase. Decades after NAFTA, many US companies have supply lines that run through Mexico and products often cross the border several times during the manufacturing process. The tariffs would increase the cost of many products finished in the US and would ultimately kill many American jobs.

Recent polling shows that Americans oppose Trump’s tariff policies by a two-to-one margin and since the onset of the trade war the president has lost ground even in many red states. Mr. Trump’s approval in the Rust Belt states that propelled him to victory in 2016, states that would be hard hit by a trade war with Mexico, is already underwater.  Earlier this week, a new poll from Texas, another state with close economic ties to Mexico, found Donald Trump trailing Joe Biden.

The new tariffs would have to be applied by declaring a new national emergency since the applicable law was not cited in the president’s previous emergency declaration. However, more than half of voters have consistently opposed the use of national emergencies to tackle the problem of illegal immigration across the southern border. The idea is drawing widespread criticism from Republicans in Congress and could spark a backlash that is large enough to override a President Trump’s veto.

If President Trump agrees to the concessions, it would represent a major victory for his strategy of threatening tariffs to force compliance. However, if the president allows the tariffs to go into effect, he could snatch defeat from the jaws of victory. The defeat could extend beyond an embarrassing rebuke from Congress to a humiliating landslide loss next year as farmers and factory workers impacted by the tariffs abandon both the president and the Republican Party.

Originally published by the Resurgent

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