President Trump’s Mexican Standoff

His approach to Peña Nieto suggests this is one adversary he fails to understand.

.. His strategy has been to soften up the opponent with verbal abuse and extreme threats, including the possibility of tearing up Nafta altogether.
.. “The president-elect has done a wonderful job of preconditioning other countries [with] whom we will be negotiating that change is coming,” Commerce Secretary-designate Wilbur Ross gloated during his Senate confirmation hearing. “The peso didn’t go down 35% by accident. Even the Canadian dollar has gotten somewhat weaker—also not an accident. He has done some of the work that we need to do in order to get better trade deals.”
.. Maybe Mr. Trump should have Googled the Treaty of Guadalupe Hidalgo. Mexicans are still smarting over that one.
.. The White House responded by saying it would extract the money for the wall with a 20% tariff on Mexican exports to the U.S. Of course American consumers would be the ones paying. But in any case it would be the end of Nafta.Americans have to hope their new president is not that reckless.

.. “sales of food and farm products to Mexico totaled a record $19.5 billion in fiscal year 2014.” That was 13% of U.S. agricultural exports.

.. Mr. Trump says that the U.S. has been outfoxed in manufacturing because American companies now make things in Mexico. But imports from Mexico contain significant American content, and production-sharing across the continent has given U.S. companies an edge in the global market.

.. But it is being debated whether that would repeal the congressional legislation that put it into effect. If so, tariffs would revert to pre-Nafta levels, which implies using the World Trade Organization tariff schedule. American exporters to Mexico would face greater tariff hikes than Mexican exporters to the U.S., because Mexico accepted much greater tariff reductions under Nafta than the U.S. did.

.. Mr. Trump might try to invoke the International Economic Emergency Powers Act of 1977 to slap his oft-promised punitive tariff on Mexican imports. But it is hard to argue that national security is being threatened.

.. The 45th president has said he wants to craft new bilateral trade agreements. Mexico says it is not interested. It has learned a hard lesson about relying on an unreliable partner, and its aim now is to diversify its trade portfolio. Policy makers are said to be exploring new agreements in the region with countries eager to replace U.S. agricultural suppliers.

Trump’s $440 billion weapon

The president-elect appears set on becoming personally involved in the contracting process. How far can he actually go?

At first glance, Trump would appear to face significant obstacles in using federal contracts as a form of leverage. But conversations with nearly a dozen contracting experts, many who previously worked on procurement issues for the government, suggest that Trump could easily blow through them — and despite the complex bureaucracy, there would likely be few brakes on his use of the process to score political points, reward his friends and punish his enemies. If he does, it could have another effect as well: driving up prices for federal government purchasing overall.

.. “Boeing’s not going to challenge them on that. If you shoot at the king, you better kill him.”

.. However, that program is years in the making and the Chinese and Russians are developing their own variants of the F-35 jet.

.. just the possibility that Trump could use the contracting process in such a manner could have significant implications across the government and economy, creating new uncertainty for both companies and contracting officers.

.. The ultimate result of Trump threatening to terminate federal contracts, whether to prevent companies from moving overseas or to cut down on perceived waste, could be higher costs for the government. Companies, faced with the increased risk of termination or negative publicity from an angry tweet from the president, would likely raise their prices in response, experts said. “With long-term complicated programs, the things that drive up prices are instability and uncertainty,” Schooner said. “That’s what he just added to the process.”

The president’s involvement in federal procurement is also likely to also slow the process.

Donald Trump’s Tweet Sets Up Jet Dogfight

President-elect suggests a Boeing plane could be used as substitute for Lockheed’s F-35 combat jet

It is unusual for a president or a president-elect to publicly negotiate government procurement spending on weapons programs. Mr. Trump’s approach of negotiating via Twitter has shaken defense contractors and the complex defense bidding and procurement process. He has said he sees it as his job to try to save taxpayers money, but defense experts have said he is tackling a process that can’t be orchestrated in 140-character social media posts.

.. Mr. Trump cannot award government contracts without going through the formal competition and bidding process.

.. Pentagon officials have long said the two planes served very different roles, with the F-35 providing more radar-evading features and serving as an airborne command post. Variants of the F/A-18 are used as attack jets and to provide electronic countermeasures to protect U.S. forces.

.. The two jets have faced off to win contracts for overseas governments, with the F-35 prevailing in most of them.

.. However, Canada last month said it would order the Boeing jets after the government dropped plans launched by the previous administration to buy the F-35.

.. The Pentagon said the average cost of the model used by the Air Force has fallen to $102 million, though some budget watchdogs said this excludes some expenses such as fixing past design problems. Defense analysts estimate the F/A-18 costs $70 million to $80 million.