Trade correspondent L.C. reports:
President Trump heeded his advisers’ advice to accept an agreement with Mexico rather than follow through on his widely criticized threat to increase tariffs on that country by 5% each month. The agreement merely reaffirms previous commitments to help stem the flow of Central American migrants through Mexico to the US. It is not a withdrawal of the threat, however, just a suspension.
The last-minute deal is a retreat from what the President said when he announced the tariffs on May 31st: “On June 10th, the US will impose a 5% Tariff on all goods coming… from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP.” Illegal immigration hasn’t stopped.
Mexicans again refused the president’s demand that Mexico become a “safe third country.” That would have meant that refugees had to apply to Mexico for asylum because it would be the first safe country they reached. This would have blocked them from passing through Mexico to apply for asylum in the US.
Mexico did agree that it will deploy its National Guard more forcefully, especially on the Guatemala border, enhance efforts to dismantle human trafficking and smuggling operations, step up information sharing and cooperation with the US, and allow migrants to stay longer while the US processes their claims.
In a June 9th tweet the president claimed that “some things…. not mentioned in yesterday’s press release…were agreed upon” and “will be announced at the appropriate time.” This is denied by both Mexican and US sources privy to the negotiations, however. The president’s tweet may indicate his awareness that he is vulnerable to criticism for not having obtained much from the Mexicans.
The US-Mexico Joint Declaration mentioned cooperation to help develop Central America, an apparent concession to an initiative favored by the Mexican president. The Joint Declaration also mentioned nothing about increased Mexican purchases of US farm products. That is notable only because President Trump had promised this would be part of a deal, tweeting on June 7th, “If we are able to make the deal with Mexico… they will begin purchasing Farm & Agricultural products at very high levels, starting immediately.” Then on June 8th he tweeted in all caps: “MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCTS FROM OUR GREAT PATRIOT FARMERS!”
This was puzzling for several reasons. US officials hadn’t mentioned agriculture as involved in any way in the talks; Mexico was, as of 2018, already the second largest export market for US farmers. Since US farm goods enter Mexico duty-free under NAFTA it is difficult to see how that market has much room to grow. The government of Mexico doesn’t purchase food or control private purchases of food, so demanding increased imports as part of a government-to-government agreement would have been statist interference in Mexico’s economy.
Sources said agriculture didn’t come up in the talks. The likely reason for President Trump’s tweets on the subject is the push-back he has gotten from Republicans representing farm states. They understood that had Trump implemented the 5% tariffs, Mexico would have immediately retaliated with counter-tariffs – taking particular aim at US agriculture. Trump therefore decided to reassure farmers that they would benefit from the deal, but it now seems that the only benefit to farmers is that they won’t be hurt.
López Obrador’s strongman leanings boosted
The Wall Street Journal’s respected Latin American commentator, Mary Anastasia O’Grady, offered a different criticism — in an op ed captioned “Trump Militarizes Mexico.” :
In his wildest dreams, [authoritarian leftist] Mexican President Andrés Manuel López Obrador could never have imagined that he would be bailed out politically by a Republican administration in Washington….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.
https://www.wsj.com/articles/trump-militarizes-mexico-11560109220
Several conservative publications had also warned the president that his Mexican tariff threat would take pressure off Democrats for their primary responsibility for the border crisis (by blocking reform of US asylum law).
President Trump’s retreat was quickly seized upon by the Democrats. Senate Minority Leader Chuck Schumer (D-NY) tweeted, “This is an historic night! @realDonaldTrump has announced that he has cut a deal to ‘greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the US.’ Now that that problem is solved, I’m sure we won’t be hearing any more about it in the future.” The Democrats doubtless bring this up whenever the President claims to need more resources to stop mounting illegal immigration.
G20 ministers meet, prepare for summit
G20 trade ministers and financial ministers met June 8th-9th in advance of the June 28th-29th G20 Summit in Osaka. According to today’s Wall Street Journal,
The Group of 20 major economies decried worsening trade tensions and their impact on global growth…
Finance ministers and central bankers fretted about the trade and geopolitical tensions and agreed to stand ready with action in case those risks intensify, according to a statement released Sunday after a weekend meeting in Japan….
Over the weekend, the U.S. offered a prospective break in trade hostilities with China. Treasury Secretary Steven Mnuchin said Saturday that President Trump and Chinese President Xi Jinping would meet at the G-20 summit in Japan at the end of this month. Separately, Mr. Trump said the U.S. struck a deal with Mexico over immigration and that he would suspend punitive tariffs there.
Meanwhile there is concern that President Trump’s Mexican tariff threat shows other trading partners that the president’s goal is to move manufacturing to the US from all other countries – not just from China. On June 5 he tweeted that “…The higher the Tariffs go, the higher the number of companies that will move back to the USA!” This followed an earlier tweet that “our many companies… that have been foolishly allowed to move South of the Border, will be brought back into the US through taxation (Tariffs),” implying that the government should control where private companies are allowed to invest.
Uncertainty spawned by the trade situation is considered a significant cause of the current sputtering of global trade and economic growth. Just about everyone is getting nervous about the economy – major investment banks even talk of possible recession within months. The second estimate of first-quarter GDP growth ticked down to 3.1% (annualized), with continuing weakness in business investment, durable goods, corporate profits, and inflation. Projections for the second quarter are dimmer, depressed by a manufacturing decline. The president’s tariffs have reportedly wiped out all but $100 of the 2018 tax cut.
Leave a Reply