I don’t know why we’re calling them “tariffs” in this case. They’re sanctions. He’s using a power delegated to him by Congress to punish Mexico economically for its behavior on a different matter. Those are called “sanctions” normally.
Anyway, it’s noteworthy that Robert Lighthizer is allegedly opposed to this move. (His office insists otherwise, but what can his office say when asked if he disagrees with his boss?) Lighthizer isn’t some free-trade cheerleader a la Gary Cohn. He’s a protectionist, one of a very few in Trump’s administration. But his protectionism has limits, particularly when he’s spent months trying to convince Pelosi and Democrats to support the USMCA only to have Trump toss this grenade into the huddle at the last second:
“Lighthizer is not happy,” one of the people, an administration official, said…
U.S. officials, including Mr. Lighthizer, have stressed to Congress the importance of enacting USMCA, meant to replace the North American Free Trade Agreement, in part to show other trading partners that high-pressure talks with Mr. Trump can lead to a win for all sides.
One of the officials noted that Mr. Lighthizer has a particularly good working relationship with House Speaker Nancy Pelosi, and behind closed doors, he has managed to leverage that relationship to make progress in advancing the USMCA through Congress. Some in the administration now fear that the president’s latest move may derail any progress Mr. Lighthizer has made, the people familiar with the situation said.
Steve Mnuchin also reportedly opposes the new tariffs. Trump seems to have overruled them on Stephen Miller’s urging, probably because he’s convinced himself that failing to take drastic action to address the crisis at the border will be a bigger electoral liability for him next year than a tariff-driven economic slowdown will — which is almost certainly false. Border hawks will back Trump ardently no matter how much Ann Coulter complains about him. Less ideological voters who preferred him to Hillary but who’ve seen a downturn in their financial prospects on his watch will not.
I’ve grown fatalistic about Trump’s expanding trade wars, though. Maybe he’s right: Mexico will be so terrified about the economic hit it’s about to take that it’ll spring into action, militarize its side of the border, and drastically reduce immigration overnight. (It really will need to be overnight, too. Trump’s plan is to hike the new tariffs five percent each month through October unless Mexico “substantially stops” the illegal influx, whatever that might mean.) If it works, he’ll have managed to solve in the span of four months a notoriously complex problem that’s confounded the United States for decades. If he’s wrong and his fascination with tariffs leads to nothing more than a brake on economic growth, killing the one truly compelling reason for swing voters to give him a second term, then he’ll be undone at the ballot box. He knows the risks here. Either he’ll succeed against all odds or the country will be rid of him and his trade policy soon enough. With some untold number of billions of dollars in lost productivity as the price.
Wonks are knocking themselves out today offering reasons why tariffs on Mexico, particularly aimed at reducing immigration, are so dunderheaded. Righty Philip Klein offers five; liberal Catherine Rampell offers nine. There’s plenty of overlap between them despite their ideological differences: This is a sizable (and highly regressive) tax on Americans who buy Mexican goods; it will cost potentially hundreds of thousands of American jobs once Mexico retaliates; it’ll probably wreck the USMCA, which was nearing ratification in Mexico before Trump pulled this, and that’ll badly hurt American businesses that depend on Mexican imports; it’s strategically foolish to engage in a multi-front trade war aimed partially at allies when the goal should be a united front against China. Lamest of all, though, is the idea that economic warfare is the way to solve this particular problem. Klein:
Fourthly, it’s difficult to see how this would facilitate containing illegal Mexican immigration. The surest way that Mexico has to reducing the desire of Mexicans to leave for America is to improve the Mexican economy, which would be immensely more difficult in the midst of a trade war with the U.S.
A good economy in Mexico won’t deter every would-be illegal from trying to cross the border but a bad one can certainly encourage people who otherwise weren’t inclined to cross to take a shot at it — unless, I guess, Trump’s goal is to slow down the U.S. economy to the point where no immigrants want to come. That’ll solve the problem too. A former Treasury Department analyst told New York magazine a few days ago, before the news about Mexico, that he estimated Trump’s escalating trade war with China would cost anywhere from half a point to a full point in GDP, not enough in itself to cause a recession but maybe sufficient to lead American businesses to cut capital expenditures, generating a decline in demand and further slowing growth. Trump’s polling on trade had also already begun to sour before the new tariffs on Mexico were announced:
In concert with this movement on American opinions of Trump and trade related policy, far more Americans now view free trade as a good thing than a bad thing. A Monmouth University poll taken this month found that 51% of Americans (and 53% of voters) say that free trade agreements are generally a good thing; just 14% say they are generally bad. Pew Research Center polling from 2018 generally showed the same thing with 56% saying free trade agreements with other countries have generally been a good thing, while only 30% say they have generally been a bad thing. (Monmouth has a higher percentage of “not sure” because it specifically offers that option.)
This recent polling is a dramatic turnaround from polling on the same questions taken during the 2016 campaign. Back in November 2015, 24% of Americans told Monmouth that free trade agreements were a good thing. A slightly larger 26% said it was a bad thing. Just before the 2016 election, Pew pegged the breakdown at 45% good thing and 43% bad thing. In other words, both pollsters indicate that positive opinion of free trade has jumped recently and negative opinion has fallen.
Parts of his own base are getting desperate. You can, and many Americans do, justify the pain caused by the China trade war on grounds that Beijing is a truly bad actor and a reckoning for its trade practices is long overdue. But a separate trade war with Mexico will be harder to justify, especially if the reductions in border-crossing aren’t dramatic and immediate.
Here’s a CNN piece from a few weeks ago about the state of play in heartland America. The likeliest outcome on the Mexico tariffs, I think, is that Trump will change his mind, probably by accepting some fig-leaf concession by Mexico that lets him back out of this while saving face. Maybe they’ll agree to increase patrols on their side of the border or whatever in exchange for dropping the tariffs and proceeding with ratification of the USMCA. If not, it’ll be up to Republicans in Congress to try to take Trump’s “emergency” tariff powers away (giggle) or, more likely, to have a court take them away pursuant to a lawsuit. WaPo notes that the president’s statutory power to use tariffs in a “national emergency” has never been exercised this way before. Maybe the judiciary will block him.
“This is survival at this point.”
American farmers are running out of patience with President Trump's trade war with China, and some tell @martinsavidge they regret voting for the President. https://t.co/Eo86AKm1mQ pic.twitter.com/d683MCvcRX
— New Day (@NewDay) May 15, 2019