Friday, May 31, 2019

Trump’s Latest Mexican Tariff Tirade Irks Senator Grassley

Senator Grassley rebukes the latest idiocy from the White House:
President Trump dropped a trade war bomb on Thursday when he announced his intent to put in place new and harsh tariffs on goods from Mexico until the “illegal Immigration problem is remedied.” And among the many worried, negative reactions was one from Senate Finance Committee Chair Chuck Grassley, in a strongly worded statement. “Trade policy and border security are separate issues. This is a misuse of presidential tariff authority and counter to congressional intent,” the statement begins. “Following through on this threat would seriously jeopardize passage USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country.” Putting this in the context of harming Trump’s own signature USMCA (the replacement for NAFTA) is a smart frame, an effort to show that the tariffs are in conflict with the administration’s own trade goals.
First Tramp thinks NAFTA is the worst trade deal ever but NAFTA 1.1 is beautiful. But now Trump wants to start a new trade war with Mexico because he did not get his racist wall? OK! Of course Trump is not the only one with a twitter account and Paul Krugman has joined Senator Grassley with lines like:
Leave the economics on one side, and consider the supposed legal justification. U.S. trade law gives the president huge discretion to impose tariffs, as long as he is willing to make bizarre claims – i.e., Canadian steel threatens national security. But imposing tariffs without Congressional approval to serve goals that have nothing to do with trade policy – in this case, an immigration crisis that exists only in his mind – goes well beyond even the brazenness of his previous actions. So he's claiming justification under the International Economic Emergency Powers Act, which he claims basically lets him do anything he wants in response to anything he declares to be an emergency. I don't see any limits under this interpretation. Could he, for example, impose punitive tariffs on Swiss watches because Swiss newspapers run cartoons that make fun of him? Why not?
Krugman continues by noting some basic economics:
OK, the economics: What we import from Mexico are a lot of consumer items, especially food items, plus Mexico is a key part of the supply chain in various manufactures, especially autos. So this would hurt U.S. consumers and also hurt competitiveness of U.S. companies. So this would be stagflationary: higher inflation plus lost jobs. Industry would howl. Also very nasty for U.S. farmers if Mexico retaliates. Plus we are, of course, throwing away any remaining credibility as a negotiating partner.
Let’s also think about the Mexican economy which will be hurt by these tariffs. And if employment prospects decline in Mexico, this will likely increase the immigration flows from Mexico. So Trump’s latest insanity will only increase what he sees as a major problem. Yes – our President is a very stupid person.

6 comments:

  1. Let’s also think about the Mexican economy which will be hurt by these tariffs. And if employment prospects decline in Mexico, this will likely increase the immigration flows from Mexico. So Trump’s latest insanity will only increase what he sees as a major problem. Yes – our President is a very stupid person.

    Eh... Perhaps he's playing 12 dimensional chess. Given

    ... an immigration crisis that exists only in his mind ...

    immigration becomes a much less important issue in the 2020 campaign. However, if the immigration flows increase between now and then ...

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  2. Marcel:

    Note I did not write this an immigration crisis that exists only in his mind. Your abuse of italics implied I did. Sorry dude – but that is dishonest.

    But more importantly you suggested Trump is “playing 12 dimensional chess”. Seriously? I do play chess and would love to take Trump on. Of course I suspect Trump never got past playing checkers.

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  3. pgl,


    Thanks for posting this. I was going to do it, but this is good.

    Something in today's WaPo report not in Krugman is that supposedly "many" aides in WH support this, unnamed. Also unnamed a few dissenters worrying that this might negatively impact Trump's revised NAFTA deal that he just sent to the House with a 30-day deadline, apparently thinking he has put Pelosi in a box, and with VP Pence off in Canada selling trying to sell it.

    Really, is there anybody in that place that can even think at all? The adults have clearly fully abandoned this playroom, which is rapidly turning into an insane asylum.

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  4. Barkley - Sarah Sanders boasted that they thought through this very carefully. Like really?! Can she have been more clear - they ARE stupid!

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  5. The latest is that indeed as I somewhere suggested, apparently Lighthizer and Mnuchin opposed this garbage, but they were not in the loop. It was a Stephen Miller deal, who apparently traveled with Trump to Japan filling him with this dumb plot. Crucially Chief of Staff Mulvaney is fully on board also.

    The oppo to this is so severe, with even McConnell not supporting Trump, although not opposing him, while various other senators and major GOP business funders have gone apoplectic.

    An especially pathetic figure is Lindsey Graham, jumping full on board to this after a long history of free trading. But given his residual McCain connection, well, heck, he really needed to get out there and show what a loyal worthless lapdog he is for Trump. Ugh.

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  6. Best line of the day comes from Tim Duy:

    https://economistsview.typepad.com/economistsview/2019/05/links-53119.html

    Tonight Trump announced via Twitter that imports from Mexico would face a 5% beginning June 10. The tariff could rise as high as 25% unless Mexico acts to stem the flow of refugees from Central America. It’s not clear that the legal authority exists to take such action, but, you know, details, details. And the White House is trying to argue that these tariff threats are separate from the USMCA trade deal that is currently a legislative priority. I guess this is like telling your wife that your mistress doesn’t have anything to do with your marriage.

    ReplyDelete

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