President Trump’s plan to slap new tariffs on Mexican imports, weeks after escalating his trade war with China, leaves the United States fighting a multi-front campaign that threatens more instability for manufacturers, consumers and the global economy.
The president’s bombshell announcement that he would impose 5 percent tariffs on Mexican imports, with the possibility of raising them to 25 percent if Mexico doesn’t stop migrants from crossing into the United States, left some economists fearing there were few limits to Trump’s appetite for trade conflict.
“In our view, if the U.S. is willing to impose tariff and non-tariff barriers on China and Mexico, then the bar for tariffs on other important U.S. trading partners, including Europe, may be lower than we previously thought,” Barclays economists said in a research note. “We think trade tensions could escalate further before they de-escalate,” Barclays added.
Adam Posen, president of the Peterson Institute for International Economics, called Trump’s move against Mexico a turning point for financial markets and the U.S. economy.
In global markets Friday, investors spooked by new tariff threats sought safety in German government bonds and the Euro rather than their customary dollar-denominated havens. This “seems to me an indicator that the concerns about the U.S. are rising,” Posen said.
The president’s latest move rocked business leaders who were already scrambling to reshape supply chains to avoid fallout from the U.S. confrontation with China. The added uncertainty may paralyze executives who can’t be sure their next supply chain location will be any safer than their last.
“A lot of companies feeling pressure to get out of China are looking at Mexico if they want to serve the US market, Vietnam if they’re more focused on Asia,” said William Reinsch, a former Commerce Department trade official. “Trump’s action yesterday scrambles all those plans.”
In one example of a company caught in the crossfire, GoPro of San Mateo, Calif., last month announced it would move manufacturing of some of its cameras from China to Mexico, so that it could stop paying tariffs to import them to the United States — tariffs resulting from the U.S. trade war with China. Weeks later, GoPro now faces new tariffs to import those goods from Mexico. The company declined to comment Friday.
As U.S. companies race to find new tariff-free places to manufacture, so far few have reported returning production to the United States, despite the president’s stated aim of using trade policy to help bring jobs back home. Many are still seeking alternative locations overseas, where labor is cheaper.
Trump said he would impose the new tariffs because the Mexican government wasn’t doing enough to stem the flow of migrants, many of whom travel through Mexico from Central America. Some White House officials who support Trump’s approach believe the threat of tariffs is the only way to get the attention of Mexican leaders.
The Mexican government tried to defuse the tension Friday, saying the two sides would meet in Washington on Wednesday for high-level talks.
If no solution is found, Mexico is certain to impose retaliatory tariffs on U.S. goods, with likely targets including U.S. pork, beef, wheat and dairy products, said Former Mexican diplomat Jorge Guajardo.
Some prominent Republicans, including Senate Finance Chairman Charles E. Grassley, raised concerns that the new tariffs could threaten a trade agreement the Trump administration clinched only months ago with Mexico and Canada, to replace the 1994 North American Free Trade Agreement.
Others said the about-face treatment of Mexico would damage Trump’s ability to negotiate trade deals it is pursuing with other partners, including China and Europe.
“You can’t negotiate a trade agreement with someone and then turn around and whack them,” said Douglas Holtz-Eakin, a Republican economist and former Congressional Budget Office director.
In late March, Trump threatened to shut the entire southern border to curb illegal immigration, but backed down a week later after an outcry. That has left some wondering how seriously they should take the latest tariff threat.
If Trump follows through with new tariffs on Mexico, it would hurt U.S. economic growth and increase the possibility of the Federal Reserve reversing course and cutting interest rates this year, economists said.
“The drag to the US economy could be meaningful, especially if the tariffs reach 25%,” the upper limit that Trump has set, Bank of America Merrill Lynch economists wrote Friday. Even if the tariff remains at 5 percent, the effective cost could be higher because many parts cross the border several times as products are assembled, and the tariff must be paid upon each crossing into the United States.
U.S. automakers will be among the principal casualties. Last year, the United States imported roughly $350 billion in merchandise from Mexico, including about $85 billion in vehicles and parts, according to the International Trade Administration.
A full 25 percent tax “would cripple the industry and cause major uncertainty,” according to Deutsche Bank Securities.
“The auto sector – and the 10 million jobs it supports – relies upon the North American supply chain and cross border commerce to remain globally competitive,” said Dave Schwietert, interim president of the Auto Alliance, an industry group. “This is especially true with auto parts which can cross the U.S. border multiple times before final assembly.”
“Widely applied tariffs on goods from Mexico will raise the price of motor vehicle parts, cars, trucks, and commercial vehicles – and consumer goods in general — for American consumers,” the industry group said. “The potential ripple effects of the proposed Mexican tariffs on the U.S. North American and global trade efforts could be devastating.”
Consumers could pay up to $1,300 more per vehicle if the tariffs are implemented, according to Torsten Slok, chief economist for Deutsche Bank Securities.
Retailers, technology companies and textile manufacturers also will be hurt. U.S. mills now ship yarn and fabric to Mexico, where it is turned into apparel and exported back to American retailers. Last year, the U.S. textile industry exported $4.7 billion in yarn and fabrics to Mexico, its largest single market.
“Adding tariffs to Mexican apparel imports, which largely contain U.S. textile inputs, would significantly disrupt this industry and jeopardize jobs on both sides of the border,” said Kim Glas, president of the National Council of Textile Organizations.
The new dispute with Mexico came as the U.S.-China trade conflict continued to deepen.
China on Friday announced it would establish a blacklist of “unreliable” foreign companies and organizations, effectively forcing companies around the world to choose whether they would side with Beijing or Washington.
The new “unreliable entities list” would punish organizations and individuals that harm the interests of Chinese companies, Chinese state media reported, without detailing which companies will be named in the list or what the punishment will entail.
Chinese reports suggested the Commerce Ministry will target foreign companies and groups that abandoned Chinese telecom giant Huawei after the Trump administration added Huawei to a trade blacklist this month, which prohibited the sale of U.S. technology to the Chinese company.
At a time when Western corporations have cut back executive travel to China after authorities detained two Canadians on national security grounds in December, the new blacklist sent another shock wave through the business community.
“I think foreign and especially U.S. firms now have to worry that China is creating a new ‘legal pretext’ to at least impose exit bans on foreign individuals who make this new list, if not worse,” said Bill Bishop, the editor of the Sinocism newsletter, referring to the Chinese practice of not allowing designated foreigners to leave China.
Aside from the new blacklist, China in recently days also escalated threats to stop selling the U.S. so-called rare earths — 17 elements with exotic names like cerium, yttrium and lanthanum that are found in magnets, alloys and fuel cells and are used to make advanced missiles, smartphones and jet engines.
Analysts said it could take years for the United States to ramp up rare-earths production, after its domestic industry practically disappeared in the 1990s. Roughly 80 percent of U.S. imports of the material come from China, according to the United States Geological Survey.
The People’s Daily, the Communist Party’s official mouthpiece, carried a stark warning for the United States this week in an editorial about rare earths: “Don’t say we didn’t warn you.”
That commentary surprised China experts because the People’s Daily, which often signals official positions with subtly codified language, uses that phrase sparingly: It famously appeared before China launched border attacks against India in 1962 and Vietnam in 1979.
Kushner’s immigration plan is a version of a discriminatory effort from more than a century ago
It’s a stretch to place the names of Jared Kushner and Henry Cabot Lodge in the same sentence; it’s difficult even to imagine that Lodge, the aristocratic Massachusetts senator who dominated the nation’s immigration debate from the 1890s into the 1920s, would give Kushner the time of day. But Kushner’s new immigration plan, aimed at reducing immigration from specific nations through the virtual elimination of what he and others have disparaged as “chain migration,” and the simultaneous valorization of the highly educated, is simply a version of a blatantly discriminatory effort Lodge initiated more than a century ago.
A man of uncommon refinement and even greater arrogance, Lodge was a Harvard PhD., the erudite author of more than a dozen books and, in many ways, the archetype of the Boston Brahmin of a century ago. His friend Thomas B. Reed, speaker of the House in the closing years of the 19th century, said Lodge arose from “thin soil, highly cultivated.” Lodge himself celebrated his fellow Brahmins for “their intense belief in themselves, their race, and their traditions.” His idea of the west, said another colleague, was Pittsfield, Mass. Look at John Singer Sargent’s remarkable likeness of the young Lodge that hangs in the National Portrait Gallery. You almost feel you are despoiling him by your very presence.
As well you might have been, if you were Italian, or Greek, or a Russian Jew or from any of the other national groups he had in mind in 1895, when he rose on the Senate floor to introduce the first restrictive immigration bill aimed at Eastern and Southern Europeans. The widening streams of emigres pouring out of the impoverished lands between the Baltic and the Mediterranean had broadened to flood stage, and Lodge determined that the best way to keep them out was to make them submit to a literacy test.
Aware of the scant educational opportunities in most of these countries, he told his fellow senators that his bill “will bear most heavily upon the Italians, Russians, Poles, Hungarians, and Asiatics, and very lightly, or not at all, upon English-speaking emigrants.” And, he argued, why should it be otherwise? “The races most affected” by his test, he explained, were those “with which the English-speaking people have never hitherto assimilated, and are alien to the great body of the people of the United States.”
Lodge’s talk was a hit. His closest friend, Theodore Roosevelt — at the time the New York City police commissioner — called it “an A-1 speech,” which pleased Lodge greatly. He was probably even more delighted with the reaction of the “Russian-Nihilistic Club” of Chicago, which burned him in effigy.
Eagerly endorsing the House version of the bill, Lodge’s Massachusetts colleague Rep. Elijah A. Morse declared himself delighted to see that it would exclude “undesirable immigration” from “southern Europe, from Russia, from Italy, and from Greece” — people, he said, who brought to the United States little else than “an alimentary canal and an appetite.”
Lodge’s literacy test bill passed with ease. But on President Grover Cleveland’s very last day in office, he struck it down with a veto, and there were not enough votes in the Senate to override.
Over the next 20 years, Lodge and his colleagues tried again and again, introducing a version of the literacy test into nearly every Congress. Three times it was approved by both chambers; three times it was struck down by veto. Only with anti-European fervor spiking on the brink of World War I, and new theories of “racial eugenics” shaping public debate, was it finally enacted over President Woodrow Wilson’s second veto, in 1917.
But for the anti-immigrationists, the new law was too little too late, and rendered ineffective by a shapely irony: Its two-decade presence on the congressional front burner had encouraged the education of the very people he wished to keep out. The Immigration Restriction League executive committee reported the baleful news that the Italian government was “spending millions on their schools in the last few months in view of the pending bill.” An IRL official wrote, “It is probable that primary schools will be presently established in many parts of Europe,” and consequently the newly enacted literacy test “is likely to diminish in value as a means of restriction as time goes on.”
A few years later, the xenophobes finally got what they wanted when Congress enacted the Immigration Act of 1924, which didn’t mess with half-measures: It slashed immigration by means of brutal quotas aimed at precisely those countries Lodge had singled out nearly three decades earlier. Where once more than 220,000 Italians arrived each year, the number was reduced by the new quota to fewer than 6,500. In 1921, the lands comprising most of the former Russian Empire had sent nearly 190,000 emigrants to the United States; the 1924 law accommodated exactly 7,346.
For the next 41 years, this brutally exclusionary act remained in place, shaping the composition of the nation, and dooming thousands — if not millions — to deprivation and death. When it was finally revoked by Congress in 1965, President Lyndon B. Johnson signed the new law on Liberty Island, in the shadow of the great statue that had been designed to welcome the unwanted. Had he chosen to give a history of what the 1924 act had been intended to do, Johnson might have invoked the words that Cleveland used in his veto message back in 1897: The literacy test,Cleveland had said, was “the pretext for exclusion.”
I don’t think Lodge would have disagreed, nor, if he’s being honest with himself, would Kushner. A plan that sets up “educational standards” as the primary benchmark for immigration isn’t likely to certify too many people fleeing from, say, Honduras or Yemen. Reeling in the numbers of immigrants granted priority to reunite with family members already here will similarly disadvantage much of Latin America, Africa and the Middle East. Jared Kushner — and Stephen Miller and President Trump — likely know very little about Henry Cabot Lodge. But he would be proud of them.
Netflix Blocks Show in Saudi Arabia Critical of Saudi Prince
Netflix has blocked an episode of its show “Patriot Act With Hasan Minhaj” from streaming in Saudi Arabia after the Saudi government complained that the episode — which is critical of the crown prince, Mohammed bin Salman — violated its cybercrime laws.
In the episode, first shown in October, Mr. Minhaj critiques the United States’ longstanding relationship with Saudi Arabia after the murder of the dissident Saudi journalist Jamal Khashoggi.
“Now would be a good time to reassess our relationship with Saudi Arabia,” Mr. Minhaj said, “and I mean that as a Muslim and an American.”
After receiving a takedown request last month from the Saudi government’s Communications and Information Technology Commission, Netflix removed the episode from viewing in Saudi Arabia last week.
In a statement, Netflix defended its decision: “We strongly support artistic freedom worldwide and only removed this episode in Saudi Arabia after we had received a valid legal request — and to comply with local law.”
.. The episode remains available to Netflix customers elsewhere in the world, and it can also be seen by viewers in Saudi Arabia through the show’s YouTube channel
.. Mr. Minhaj has not commented publicly on the removal of the episode. But in an interview published in The Atlantic last month, Mr. Minhaj spoke of the fear he felt after creating it.
“There was a lot of discussion in my family about not doing it,” he said in the interview. “I’ve just come to personal and spiritual terms with what the repercussions are.”
A Week After the Midterms, Trump Seems to Forget the Caravan
For weeks before the midterm elections, President Trump warned ominously about the threat from a caravan of migrants streaming from Central America toward Mexico’s border with the United States. It was a fearsome mix of criminals and “unknown Middle Easterners,” Mr. Trump claimed darkly, one that constituted a genuine national emergency.
But since the election last week, Mr. Trump has tweeted about the caravan exactly once — to issue a proclamation preventing those who cross the border illegally from applying for asylum in the United States. Fox News, which faithfully amplified Mr. Trump’s warnings about the migrants, has gone similarly quiet on the subject.
There was little dispute, even before Election Day, that Mr. Trump was exploiting the caravan for political purposes. But analysts, historians and veterans of previous administrations said there were few comparable instances of a commander in chief warning about what he called a looming threat, only to drop it as soon as people voted.
While the caravan has faded from television screens, the costs of Mr. Trump’s response to it have not. Nearly 6,000 active-duty troops remain deployed from the Gulf Coast to Southern California, where they are putting up tents and stringing concertina wire to face a ragtag band that is still not near the border.
“Now that the political utility of troops on the southern border to face a fictitious caravan invasion threat is over,” said Adm. James G. Stavridis, a former commander of the military’s Southern Command, “let’s hope the president will stand down the troops so they can be with their families — especially over the holidays.”
But some officials in the Defense Department worry that Mr. Trump could do the opposite — seek an exception to the Posse Comitatus Act, the 1878 law that prohibits the government from using active-duty troops to enforce laws inside the country’s borders.
.. voters who made up their minds in the last three days before the election said they voted for Democrats over Republicans 53 percent to 41 percent. That coincides with the period in which Mr. Trump redoubled his focus on the caravan, rejecting the advice of aides who wanted to air a commercial promoting the healthy economy.
.. At one campaign rally after another, Mr. Trump said the election came down to “the caravan, law and order, and common sense.” In Mesa, Ariz., on Oct. 19, he said: “You got some bad people in those groups. You got some tough people in those groups. And I’ll tell you what — this country doesn’t want them. O.K.? We don’t want them.”
.. A day earlier, he tweeted about the “assault on our country at our Southern Border, including the Criminal elements and DRUGS pouring in.”
Mr. Trump posted footage of an undocumented immigrant on trial for killing a police officer, and his campaign organization produced an ad featuring migrants trying to scale a wall to dramatize the stakes of the election.
“I’ve never before seen an American president, after going all over the country about this national crisis, then the day after an election shrug,” said Douglas Brinkley, a presidential historian at Rice University.
The closest parallel that Mr. Brinkley drew was to President Lyndon B. Johnson, who seized on — and mischaracterized — two murky encounters between American and North Vietnamese warships in the Gulf of Tonkin in 1964 as a pretext to accelerate America’s engagement in the Vietnam War. Still, he said, Mr. Trump’s response was of a different order.
“It was a dangerous form of xenophobia, aimed solely for electoral purposes and had nothing to do in the end with real national security,” Mr. Brinkley said.
For the troops, so far, it has mostly been an expensive field trip. The cost of the deployment is not known, but budget officials believe it could reach $200 million if all 15,000 troops that Mr. Trump pledged are ultimately sent.
.. Defenders of Mr. Trump said the troops would take little notice of his sudden lack of emphasis on the caravan.
“Knowing the troops, knowing how busy they are, they’re not focused on him,” said Jack Keane, a retired four-star general who is a former vice chief of staff of the Army. “They’ve got a job to do.”
But other former military officers said the soldiers were well aware of the political motivation behind their mission. Lacking much else to do, they will quickly pick up on Mr. Trump’s loss of interest in the caravan, and it will add to their already depleted morale.