Biden Takes On ‘Trump’s Tariffs’

The Democrat seems to think protectionism isn’t popular in Iowa.

Are tariffs popular? Donald Trump seems to think so and, after nearly 18 months of imposing the border taxes willy-nilly, many Republicans seem to agree. They may soon get a political test of that proposition as Joe Biden, the Democratic leader in the 2020 race against Mr. Trump, took direct aim at the cost of tariffs in Iowa on Tuesday.

He added: “And how about manufacturing? Trump’s tariffs and trade wars are hitting a lot of American manufacturing—especially the American automobile industry—choking it to within an inch of its life.”

.. “America’s farmers have been crushed by his tariff war with China,” Mr. Biden said in remarks Tuesday evening in Davenport. “He thinks he’s being tough. Well, it’s easy to be tough when someone else is feeling the pain. How many farmers across this state and across this nation have had to face the prospect of losing their business, of losing their farm because of Trump’s tariffs?”

For one thing the tariff issue gives Mr. Biden a way to attack Mr. Trump on jobs despite the strong economy. Talking tough about alleged foreign cheaters is popular in the abstract. But when the costs become visible, in higher prices and lost markets from foreign retaliation, public support may drop. Talking about the pain of tariffs lets Mr. Biden focus on specific damage rather than having to dispute the health of the national economy.

 

.. Mr. Biden was also shrewd Tuesday to walk back his claim in May that China isn’t competition for the U.S. “We are in a competition with China,” he said. “They are a serious challenge to us, and in some areas a real threat.” But he added that “while Trump is pursuing a damaging and erratic trade war,” China is investing in “technologies of the future.” He then took the appealing line that the U.S. “can out-compete anyone.

The Democratic front-runner is hardly pure on tariffs, having suggested only last week that they can be a tool to enforce carbon-fuel limits on other countries. He also favors much higher taxes, and his climate agenda is a Big Government fantasy. But in attacking Mr. Trump’s tariffs, he is setting himself apart from protectionist Democrats Bernie Sanders and Elizabeth Warren and reaching out to free-trading farmers and other American exporters.

All of which ought to be a warning to Mr. Trump. Farmers and business CEOs have been willing to give the President some political leeway on his tariffs because he says they are leverage for better trade deals. But if the deals don’t materialize, and the only tangible result is the pain, the politics of tariffs might not look so appealing in 2020.

Mr. Trump won Iowa in 2016 by 9.4 percentage points. In the most recent Iowa poll for 2020, in March, he trailed Mr. Biden by six.

Trump Militarizes Mexico

In return for having the tariff “indefinitely suspended,” Mexico has agreed to militarize the country using Mr. López Obrador’s newly created National Guard, which is under military command. The effort will start at the southern border, though where it will end is anybody’s guess.

Mr. Trump has claimed victory in his tariff gambit. But it’s unclear how effective the promised troops will be at stopping migrants. The main causes of the crisis are liberal U.S. laws and procedures for claiming asylum, which attract migrants from Central America and other places. Congress has refused to pass reform. But markets work, as more than a half-century of a failed war on drugs proves, and the wild Guatemalan border will not be easily sealed.

.. Meanwhile, AMLO, as the Mexican president is popularly known, also won, though insidiously. The career politician with an authoritarian bent is a backer of Venezuelan dictator Nicolás Maduro. Since taking office in December, he has been cozying up to the military. Now he pockets more power, and with the blessing of Washington. This is a setback for the rule of law.

President López Obrador initially had very high approval ratings. But they began falling when Mexico’s economy slumped in the first quarter, and his attacks on the press alienated even some of his most ideologically sympathetic constituents. Mexicans who were worried about the strongman instincts of their socialist president gained hope that the slowdown would force him to exercise greater restraint.

Then came Mr. Trump’s May 30 threat, and Mexicans rallied behind their president. A poll by the Mexican daily El Financiero last week found that “84% of Mexicans believe that, faced with pressure” from Mr. Trump, “the country should remain united and support” AMLO.

Mr. López Obrador knows how to play politics. In the earliest months of his presidency he encouraged the migrants before taking a more practical stance. In the face of standard Trump hyperbole about Mexico, he calmly sent a delegation to Washington to negotiate. His base is praising the deal, though had it been sealed by an AMLO opponent they would have vigorously denounced it. His opposition is happy because free trade is saved.

An AMLO rally Saturday in Tijuana was originally billed as “an act of unity to defend the dignity of Mexico and in favor of the friendship with the people of the United States.” After the two sides came to agreement, it was changed to a “celebration” of the deal—and of the new life that Mr. Trump breathed into AMLO’s presidency.

..  Blowing up the North American economy to solve the migration crisis never made sense. Before the North American Free Trade Agreement, the average tariff for Mexican goods entering the U.S. was only 4%. Twenty-five years later, North America is a highly integrated productive colossus that depends for its efficiency on seamless cross-border supply networks.

Tariffs, Mr. Trump’s Miracle Cure

The president appears to view tariffs as the solution to a wide range of foreign policy problems. It isn’t working.

So we’re going to tax Americans until Mexico stops allowing people from Central America to exercise their legal right to seek admission to the United States?

Seems pretty foolproof.

President Trump announced Thursday evening on Twitter, his preferred medium for policymaking, that he plans to impose a new tariff on all imports from Mexico, “until the illegal immigration problem is remedied.”

The tariff would begin at 5 percent on June 10 and gradually rise to 25 percent by October.

Mr. Trump persists in the falsehood that tariffs are paid by America’s trading partners. The truth is that Mexico would no more pay this tariff than it is paying for the construction of a border wall. The evidence is clear: Mr. Trump’s tariffs are taxes being paid by Americans.

This new tax would sit atop Mr. Trump’s tariffs on aluminum and steel imports, and Mr. Trump’s tariffs on Chinese imports, and the bill is adding up. The United States so far has collected about $19 billion in Trump tariffs. A full 25 percent tariff on Mexican goods could add as much as $87 billion a year to that total.

Mexico would most likely respond by imposing retaliatory tariffs, which is especially bad news for the probable targets: American farmers. About two weeks ago Mr. Trump ended a tariff on Mexican aluminum and steel, and Mexico ended a tariff on American farm goods. So much for that false dawn. Farmers may need to resume the search for new markets.

Taxation is always painful, and always the question is whether the benefits outweigh the pain. In this case, Mr. Trump is using a tariff as a cudgel to induce Mexico’s cooperation in keeping immigrants from America’s southern border. While the cost of the tariff would be paid by Americans, the Mexican economy most likely also would suffer a loss of sales to the United States.

Mr. Trump might succeed in pressuring Mexico to take stronger steps on immigration. Tariffs, however, are a very crude tool. Most of the immigrants seeking to cross the southern border are fleeing problems in Central America that are beyond the control of the Mexican government. Moreover, while Mr. Trump tends to refer to all of the immigrants as illegal, many are exercising a legal right to seek asylum.

Past administrations have sought cooperation from Mexico on immigration issues without disrupting economic relations between the two countries. Mr. Trump’s decision to mix the two issues threatens to disrupt both economies because the manufacturing sectors in Mexico and the United States are tightly intertwined. About two-thirds of trade between the countries is between factories owned by the same company, according to Deutsche Bank.

Other American trading partners with whom Mr. Trump is trying to negotiate new trade deals, including Japan and the European Union, presumably are having the same thought.

Last but not least, messing with Mexico weakens the Trump administration’s hand in its dealings with China. Mr. Trump’s tariffs on Chinese goods have persuaded some American companies to relocate production to Mexico from China. Those companies now face a more difficult choice. Mr. Trump and his advisers also may find it more difficult to rally international support for their efforts to persuade China to make changes in its economic policies.

Mr. Trump’s apparent determination to fight with all of America’s trading partners at once makes it harder to make progress on any particular front.

Once again, Mr. Trump is lashing out rather than acting strategically — and Americans will feel the pain.