Question

Would you support a decision of the Trump administration to impose up to a 25% tariff on Mexican imports, unless Mexico stems cross-migrant flows? Discuss the advantages and disadvantages of your point of view.

Answer 1

One definitely needs to support the decision considering the high number of illegal immigration

The decision showed the administration going to new lengths, and looking for new levers, to pressure Mexico to take action — even if those risk upending other policy priorities, like the United States-Mexico-Canada Agreement, a trade deal that is the cornerstone of Trump’s legislative agenda and seen as beneficial to his reelection effort. It also risks further damaging the already strained relationship between the U.S. and Mexico, two countries whose economics are deeply intertwined.

But the sudden tariff threat comes at a peculiar time, given how hard the administration has been pushing for passage of the USMCA, which would update the North American Free Trade Agreement. It comes less than two weeks after Trump lifted import taxes on Mexican and Canadian steel and aluminum, a move that seemed to clear an obstacle to its passage, and the same day that both Trump and López Obrador began the process of seeking ratification. The deal needs approval from lawmakers in all three countries before it takes effect.

It wouldn’t be the first time Trump has punted on an immigration threat. In late March, Trump threatened to shut the entire U.S.-Mexico border if Mexico didn’t immediately halt illegal immigration. Just a few days later, he backed off the threat, saying he was pleased with steps Mexico had taken in recent days. It was unclear, however, what Mexico had changed.

The crumbling city of Tapachula, near the Guatemalan border, has become the epicenter of the crackdowns, with thousands of migrants stranded because the Mexican government isn’t providing them visas to travel. In addition, the Mexican government has allowed the U.S. to send back hundreds of asylum seekers from Central America and other countries, forcing them to wait out their cases in Mexico.

Business groups voiced alarm at the tariff plans, which they say could harm current and future trade agreements between the two countries and lead to retaliation against U.S. farm products and manufactured goods in the North American supply chain.

In addition to autos and auto parts, the U.S. imports a variety of consumer goods from Mexico, such as appliances, and agricultural products like fruits and vegetables.

The tariffs would likely take an economic toll in both countries. The U.S. imported $346.5 billion of Mexican goods in 2018, according to the Office of the U.S. Trade Representative. U.S. importers would pay more for Mexican products due to the tariffs, essentially a tax at the border, and likely pass a significant portion of the price hike on to consumers. Meanwhile, Mexican exporters, many linked to U.S. or international investors, in turn would come under pressure to lower prices or face a loss of customers to competing manufacturing economies world-wide.