Economy

Mexico is a prop in Trump’s narrative

With regards to his nation’s relationship with Mexico, US president Donald Trump has determined to take a place that’s directly reckless and suicidal. Reckless, as a result of he’s single-handedly scuttling a bilateral relationship with a nation that’s important to the prosperity, safety and wellbeing of the US. Suicidal, as a result of the punitive tariffs he threatened on all Mexican imports just a little over two weeks in the past would solely boomerang and smack America within the face.

The teachings from what is unquestionably the gravest diplomatic disaster between the nations for the reason that homicide of an undercover US Drug Enforcement Administration agent on Mexican soil in 1985 are worrisome. First, there’s the resounding message to the world that the US can’t be trusted in any negotiation (regardless of having simply finalised the revamp of a brand new regional commerce settlement). Second, they’re a reminder of what occurs when Mr Trump is allowed to proceed weaponising commerce coverage. Third, they underscore that he’ll proceed to conduct international affairs via tirades, ultimatums and tantrums.

The US president won’t ever grasp why tariffs on Mexican exports are a self-inflicted wound. The built-in provide chains and joint manufacturing platforms which have been in-built North America over greater than 20 years of regional commerce imply that out of each greenback that Mexico exports to the US, 40 cents are American inputs.

So a 5 per cent tariff on Mexican exports can also be a 5 per cent tariff on their US elements. The consequences could be felt on every thing from beer and avocados to medical devices, heavy equipment, vehicles and aerospace parts.

A 5 per cent tariff on all imports coming to the US from Mexico would result in a rise in direct prices to American shoppers and companies of about $28.1bn annually. And if Mexico had been to retaliate, because it efficiently did final yr with a carousel of surgical countervailing duties designed to extract the very best financial and political price on the congressional district and state ranges, the ache could be widespread in Republican states.

No surprise Republicans in Congress, governors and enterprise associations swiftly mobilised to criticise the president and drive him to again down; this time round it was clearly a tariff too far.

However Mr Trump’s menace was probably not about tariffs. It was about ransoming North American commerce to prise concessions from Mexico on immigration coverage, which he might then promote to his base as proof of his hardline stance on migrants, refugees and border safety.

You can not implement your method out of a migration disaster and the US president was not actually trying to find a deal; what he actually desires is a trophy. Mexico is a prop in a story managed by Mr Trump, and President Andrés Manuel López Obrador would do effectively to recollect this. Whereas Mexico has been behaving just like the grownup on this relationship, in search of to de-escalate rigidity each time Mr Trump makes a brand new menace and appeasing the White Home to keep away from a worse consequence, that shouldn’t be conflated with good coverage.

Mr López Obrador mustn’t blink and kowtow as each nations confirm whether or not Mexico’s efforts to discourage Central American transmigration have labored. But when Mr Trump does return to the warpath, Mexico wants to carry the road and work with its many allies and stakeholders within the US to pile political strain on the White Home.

It must also reinstate its retaliatory duties on every thing from agricultural exports and Christmas timber to Bourbon and bikes, and let US shoppers and companies bear the brunt of their president’s selections.

Within the coming weeks and months, whereas Mr Trump performs checkers, Mexico might want to play chess. The US has had the luxurious of an ally nation at its southern border for many years. Wrecking the brand new US-Mexico-Canada commerce settlement, and its political and financial foundations, could have a massively detrimental affect on the bilateral relationship that has been constructed so painstakingly for the reason that creation of Nafta and within the aftermath of 9-11. Mr Trump needs to be very cautious what he needs for.

The author was Mexican ambassador to the US from 2007-2013

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