NEW YORK — Since the end of World War II the US has gone from being a nation of canned bean eaters and thousands of creamed vegetable recipes to being a country of fresh fruits and vegetables all year long.
These are nice things, and because of President Donald Trump, we may very well be about to have them all taken away.
According to Dolia Estevez, a journalist based in Washington, D.C., Trump was incredibly nasty to Mexican President Enrique Peña Nieto during a recent phone call.
“I don’t need the Mexicans. I don’t need Mexico,” Trump reportedly told the Mexican president. “We are going to build the wall and you all are going to pay for it, like it or not.”
That’s really, really not true. It’s also all very, very bad.
On the call, Trump threatened Peña Nieto with a 10% tax on Mexican exports and a 35% tax on exports that hurt Mexico the most. Problem is, that would just really hurt us.
Non-partisan think tank The Wilson Center estimates that 4.9 million American jobs depend on our trade with Mexico, and if people don’t have jobs they can’t have ANY nice things, American or Mexican. The Peterson Institute — another think tank — says that a trade war with Mexico and China would push us into recession.
So that’s one thing.
Another thing is that Mexico is the US’ third largest trading partner. In 2015 the US imported $295 billion in imports from the country. Here’s how that breaks down, according to the Office of the US Trade Representative (emphasis added):
- The top import categories (2-digit HS) in 2015 were: vehicles ($74 billion), electrical machinery ($63 billion), machinery ($49 billion), mineral fuels ($14 billion), and optical and medical instruments ($12 billion).
- US imports of agricultural products from Mexico totaled $21 billion in 2015, our 2nd largest supplier of agricultural imports. Leading categories include: fresh vegetables ($4.8 billion), other fresh fruit ($4.3 billion), wine and beer ($2.7 billion), snack foods ($1.7 billion), and processed fruit & vegetables ($1.4 billion).
- US imports of services from Mexico were an estimated $21.6 billion in 2015, 11.0% ($2.1 billion) more than 2014, and 50.0% greater than 2005 levels. It was up roughly 191% from 1993 (pre-NAFTA). Based on 2014, leading services imports from Mexico to the US were in the travel, transportation, and technical and other services sectors.
Fresh fruits and vegetables are nice things. Guac on your $10 Chipotle is a nice thing. Cheap cars are nice things. Much of the US auto industry’s supply chain runs through Mexico where labour is cheaper. The country ships $50.5 billion in finished cars and $501 billion in car parts to the US, according to the Center for Automotive Research. Over the past six years, US car manufacturers have invested $24 billion in Mexico’s auto industry.
What Trump doesn’t understand is that countries like Mexico can always retaliate against us if their pride is hurt. And they can do it with the support of their people — it will be a political win.
Last week the president of Mexico’s national conference of governors, Gov. Graco Ramirez of Morelos, told a Mexican newspaper that Trump had declared “war” on Mexico.
“With Trump, dialogue is exhausted,” Ramirez told El Universal. “It doesn’t make sense to sit down with him. He doesn’t change his attitude or his position.”
Pain but no gain
Now, if you listen to what Trump and his administration say about our economy they want to change all that anyway. They want to rip up supply chains and figure out how to force companies to bring businesses back here. They don’t care who it hurts.
Peter Navarro, Trump’s National Trade Council head, laid this callous view of economic policy out in an interview on CNBC last week. When host Melissa Lee pointed to a Citigroup estimate that taxing imports from other countries — a provision called “border adjustment” that acts like a tariff — would be a massive hit to retail company earnings and put thousands of American jobs at risk, Navarro called Citigroup “fake news.”
“Yeah, well, the Dow just hit 20,000, how you like them apples?” he said. “There are winners and losers.”
He’s wildly wrong. In trade wars, there are generally only losers. By the time countries get back to the table to negotiate, jobs, savings, and entire ways of life are lost.
Retired General David Petraeus just warned us about this too — about the danger of protectionism:
“To create a foundation for prosperity, we put in place an open, free, and rules-based economic order intended to safeguard against the spiral of protectionism that produced the impoverishment and radicalization of the 1930s. And to protect freedom here at home, we adopted a foreign policy that sought to protect and, where possible, promote freedom abroad along with human rights and rule of law.”
This is an opinion column. The thoughts expressed are those of the author.
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