trump-tariffs

DUH: Trump Tax Cuts Did Nothing But Give Rich People Money

–A new report from the Congressional Research Service confirms the obvious, that most of the Trump/Republican tax reform went to people who are already rich

Do Trumpists Not Understand THEY Pay Trump’s Tariffs?

–It’s increasingly clear that Trumpists, and Donald Trump himself, don’t understand that they are the ones paying Trump’s tariffs on China and Mexico

The New Tariffs Against Mexico Signal the U.S. Isn’t a Reliable Negotiating Partner

The Trump administration has sent a message to the world with its new tariff threats against Mexico: No deal is ever a done deal.

That effect may be bigger than the immediate 5 percent tax on Mexican imports set to go into force June 10 and escalate to 25 percent over time.

Mexico had seemed to resolve its trade tension with the United States, in the form of a reworked Nafta now known as the United States-Mexico-Canada Agreement, or the U.S.M.C.A. The deal was moving toward fruition after the United States lifted steel and aluminum tariffs on its North American neighbors just days ago, and lawmakers in all three countries began considering it.

The new tariff threats, announced by President Trump in a tweet on Thursday, are aimed at pressuring the Mexican government to do more to combat migrants traveling from Central America to the U.S. border to seek asylum. It’s an issue not really related to trade policy at all. But the tariff threats amount to a vivid signal, especially to allies, that there is no permanent trade peace with the Trump administration, and could have significant consequences for future trade negotiations.

If you are working in a trade ministry in Brussels, Tokyo or Ottawa, how much confidence would you have that any deal you strike with American negotiators will have staying power?

“I don’t see how our trading partners will continue to negotiate with us as if we have any credibility going forward,” said Emily Blanchard, a trade economist at Dartmouth’s Tuck School of Business. “They’re going to have a much harder time selling any costly domestic reform or sacrifice that is a concession to the U.S., because the U.S. is acting like an erratic bully.”

The escalating trade war between the United States and China had put Mexico in a promising position, as a destination for businesses making decisions about where to locate their supply chains and wary of tensions with China. Mexico has higher labor costs than China, perhaps, but it has an appealing geographical proximity to the United States and the favorable trade relations that seemed to be codified by the U.S.M.C.A. deal announced at the White House last fall.

Even if the new tariff is canceled before it is scheduled to begin, the action sends a signal that any cross-border supply chain — for decades a crucial strategy for large multinational firms and quite a few smaller ones — is inherently risky.

“Mexico and Canada looked like a safe harbor because you just signed U.S.M.C.A.,” said Philip Levy, a senior fellow on the global economy at the Chicago Council on Global Affairs. “This action is saying, no, there really isn’t a safe harbor.”

The Trump administration’s trade strategy had seemed to be coming into focus. There was the U.S.M.C.A. deal, a relatively calm period of relations with Japan and Europe, and increased pressure on China. It all looked like a fairly coherent strategy of reaching trade peace with allies before starting a concerted assault on a range of problematic Chinese practices.

The renewed trade tension with Mexico, driven by issues unrelated to trade, could undermine that strategy.

Sometimes when you make a deal, it is a one-time transaction. If you are selling a car to a stranger on the internet, you may try to strike as aggressive a deal as possible. And if you’re unethical, you might even hide some problems with the car or try to change the terms after shaking the buyer’s hand.

But when selling a car to your next-door neighbor, you’ll probably be a lot more upfront. You will be seeing each other a lot, and are likely to have other issues you’ll need to resolve down the road. You need a sense of mutual trust, and selling the neighbor a lemon or reneging on an agreed deal is no way to establish it.

When two countries that share a long border are negotiating a trade deal, it is very much part of a repeating game. Mutual trust matters, because there will be an endless series of disputes that need resolving and much to gain from having a good relationship.

That kind of trust may have just taken a hit that will last, even after the details of the new Mexican tariff are long forgotten.

“A very straightforward interpretation is that trade deals with the U.S. buy you nothing,” Mr. Levy said. “You may be asked to jump through hoops and do things that are painful, but in the end you have no guarantees that the president won’t stick on tariffs when something irritates him.”

It is true that Mexico — and other major trading partners — need the huge American market. And Mr. Trump’s constant threat of tariffs may succeed at getting victories on some discrete issues.

But if you sell the family next door a lemon, don’t be surprised if nobody in the neighborhood wants to do business with you again.

Trump defies close advisers in deciding to threaten Mexico with disruptive tariffs

The tactic sowed disruption on multiple fronts Friday as top Mexican officials rushed to Washington to defuse the threat, the stock market tumbled on the news and administration officials offered little explanation of how increasing the prices of goods from Mexico would stop illegal immigration at the border, a goal that has eluded multiple administrations.

“He’s trying to solve a humanitarian situation by creating economic chaos,” said Congressional Hispanic Caucus Chairman Joaquin Castro (D-Tex.), whose state would be devastated in any trade standoff with Mexico. “He doesn’t have a coherent strategy for how to deal with any of this stuff.”

On Friday, Trump defended his threat, insisting that Mexico “has taken advantage of the United States for decades.”

“Mexico makes a FORTUNE from the U.S., have for decades, they can easily fix this problem,” Trump tweeted as the pushback from Republican lawmakers and the business lobby continued to pour in. “Time for them to finally do what must be done!”

Under the White House threat, the United States would implement a 5 percent tariff on all Mexican imports starting June 10 if illegal migration hadn’t stopped by then. That figure would rise to a 10 percent tariff on July 1 and then an additional 5 percent on the first day of each month for three months, maxing out at 25 percent on Mexican products until the country “substantially stops the illegal inflow of aliens coming through its territory.”

In public, Trump administration officials sought to defend the plan by pointing to the rising number of asylum seekers arriving at the southern border — a trend that shows no signs of reversing. The Department of Homeland Security projects that the month of May is on track to record the highest number of border apprehensions in more than a dozen years.

“Let me [be] clear, the current situation is risking the lives of children every day,” acting homeland security secretary Kevin McAleenan said, calling for Mexico to take “significant action” to secure its own southern border.

But privately, top officials were caught in an administration-wide scramble as aides continued to have meetings with Trump on Friday to try to persuade him to reverse course, two officials said.

The idea of enacting unilateral tariffs against Mexico had surfaced repeatedly in internal discussions — and seriously enough that the White House Counsel’s Office had already written a draft of the plan when Trump brought up the proposal again Wednesday, officials said. White House lawyers had been studying their legal options since Trump threatened to shut down the entire U.S.-Mexico border before backing down.

The arguments against the tariffs — voiced internally by Kushner, Lighthizer and Treasury Secretary Steven Mnuchin — did little to dissuade Trump, and Kushner was asked to call Mexican officials to inform them of the impending threat.

After the Wednesday night meeting in the Oval Office, the tariff order was finalized by the White House counsel and the office of Stephen Miller, a senior White House adviser and immigration hard-liner who oversees domestic policy.

But Thursday morning, it was unclear whether Trump would actually follow through, even as he hinted at a “big league” announcement on immigration before leaving Washington for an Air Force Academy address in Colorado. Other White House offices not included in the initial tariff discussions — such as the legislative affairs division and the office of the public liaison — learned as aides came into work Thursday that Trump was considering such an announcement.

By the time a cadre of senior White House aides assembled for a 4:30 p.m. meeting Thursday, the decision to announce the tariffs was essentially finalized, even though it had appeared to be in flux for much of the day. Trump called in from Air Force One as he returned from Colorado and told the staff that he wanted the announcement put out immediately.

Vice President Pence — traveling in Ottawa to meet with Canadian Prime Minister Justin Trudeau and promote the pending trade agreement — separately phoned congressional Republican leaders to inform them of the imminent announcement. The top Republican on the House Ways and Means Committee, Rep. Kevin Brady (Tex.), was told in advance, but Senate Finance Committee Chairman Charles E. Grassley (Iowa), who leads a powerful panel overseeing trade policy, was not, according to their aides.

“The president didn’t blindside his own party,” White House press secretary Sarah Sanders said Friday. “If Republicans weren’t aware, then they haven’t been paying attention.”

From the driveway of the White House, Sanders continued, “Anybody in this country — or frankly, in the world — that says they’re surprised by this has been living under a rock and not paying attention.”

Nonetheless, Trump told people around him that he was well aware that many Republican senators would not like the tariff threat. Indeed, White House legislative staffers were flooded with calls Thursday night, although they referred all the inquiries to the counsel’s office, according to two senior White House aides.

The objections were particularly pointed Friday from proponents of free trade such as Sen. Patrick J. Toomey (R-Pa.), but they also flooded in from border-state Republicans who have been reliable Trump allies but also are on the ballot in 2020.

“While I support the president’s intention of stopping unchecked illegal immigration, I do not support these types of tariffs, which will harm our economy and be passed onto Arizona small businesses and families,” Sen. Martha McSally (R-Ariz.) said in a statement.

A spokesman for Sen. John Cornyn (R-Tex.) conveyed similar sentiments: “Senator Cornyn supports the President’s commitment to securing our border, but he opposes this across-the-board tariff which will disproportionately hurt Texas.”

House Democrats began considering legislative remedies aimed at halting imposition of the tariffs, although one leadership aide said they needed more information from the administration to determine their options.

Mick Mulvaney, the acting White House chief of staff, and economic staffers fielded a range of calls Friday from business leaders. In response, the White House told corporate officials to put pressure on Mexico, according to a senior administration official.

Meanwhile, the Mexican government scrambled to stave off the looming taxes, announcing that its delegation and U.S. officials will meet in Washington on Wednesday, with the sides led by Mexican Foreign Minister Marcelo Ebrard and Secretary of State Mike Pompeo.

“Trump loves tariffs. That’s fine, but this needs to end in policy wins,” said Republican donor Dan Eberhart. “The short-term pain needs to produce a long-term gain for America.”