Trade With A Friendly Nieghbor
This is my second try on this blog. Earlier I wrote one that was so technical and boring, it was obvious that I didn't have a complete grasp of the subject. So this is my second try at this topic. Let's see if I learned anything!
The subject is trade. Trump has threatened Mexico with tariffs if they don't pay for the wall he wants to build between Mexico and the US. Trump throughout the presidential campaign was pushing for a huge wall and that Mexico was going to pay for it. He was calling the Mexican people rapists and and worse.
Now at the end of his first month in office, he has really messed relations with a friendly ally. He threatened to sent in US troops to clean up the drug cartels. Blaming Mexico for the drug problem in the United States. Ignoring that we have a demand for this deadly product. So, we bare some of the burden. Then he informs them that we are building the wall, and Mexico will pay for it. And then he threatened tariffs on products from Mexico to help pay for the wall. Somehow Trump doesn't realize that we the tax payer, would be the ones footing the bill.
Mexico has been looking to other markets to to diversify their trade partners. We know China sent a delegation into Mexico to start a dialogue for a trade treaty. China find Mexico a very lucrative market for them. Even as the US has pulled out of the TPP Mexico is exploring a relationship with the Asian market. Many believe that will be a strong market for decades. There is exportation into selling cars assembled in Mexico to the Asian market. Assembly plant have become so sophisticated and economical that even with the cost of transportation it would still be very profitable.
Mexico has been making contacts with South American countries, in efforts to buy corn, with would put a big hit on Texas and Wisconsin. Mexico buys 25% of the US corn. In fact, a Mexican is pushing a bill that would cut buying from US markets. They would cut it to 80% the first year, 60% the second till they would get to zero. They would hit US markets in strategic areas, and certain states. They seem to be targeting red states. Trump has always said he would never put his cards on the table. Mexico heard him on the campaign trail and have been planning a strategy in response to want Trump was saying. Mexican Foreign Minister
Luis Videgaray said the Mexican government would slap levies on certain goods aimed at punishing southern US regions dependent on Mexican exports.
Another strategy has to do with immigrants from Central America. Currently Mexico is our buffer keeping them from reaching the US. If they abandon that help, it could lead to more illegal crossings than we have now. Mexico has done a good job of protecting their south border. We know that illegal crossings by Mexicans has gone the other way. They now have a middle class and are growing their job markets.
Another weapon, Mexico could announce that it would no longer enforce US patents and copyrights on its soil. Consumers and medical patients in Mexico would benefit at the expense of corporations from the US and elsewhere. I don't think they will go this route but you never know.
What I'm trying to say here is that a trade war benefits no one. NAFTA didn't take the jobs away. Companies have evolved and to things differently now. Automation is one culprit. Detroit is making as many cars as ever with far fewer employees. We should evolve with the times. Coal jobs are not coming back, and it has nothing to do with Hillary. Her sin was she told the miners the truth. A truth they didn't want to hear. Trump lied and told them they would keep them open. Problem is, propane gas is so much cheaper, and cleaner. I saw that obnoxious lady Tommy Laren on Bill Mahrs a few weeks ago, and whenever she did agree with something, she'd just say how about coal. Well coal is dead.
Both countries would lose in the short term. But it could be a big boost to Mexico in the long term. Nothing is certain as Trump continues to insult the Mexican government and people. Let’s hope he grows up soon.
