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Economic Viewpoint: 91% Left
Social Viewpoint: 64% Libertarian
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Donald Trump’s new political bombshell–a plan to levy tariffs against neighboring Mexico–not only opens a new front in Trump’s trade wars but has set off alarm bells among economists, Democrats and even other Republicans.
Trump’s plan to slap 5 percent tariffs on imports from Mexico comes just weeks after he racheted up existing tariffs against China. And under the Trump plan, tariffs against Mexico could skyrocket to 25 percent.
Furthermore, Trump’s decision to hit Mexico with tariffs wasn’t even spurred by any trade issue; rather they were imposed due to his ongoing fury with immigration across the southern border.
“The president has been so agitated by the flow of migrants at the border by the increase of numbers over the last few months, and very frustrated by the inability of his administration stop it and change the trends down there,” said Washington Post reporter Philip Rucker. “And he sees tariffs as one area where he can unilaterally act. It’s why he likes tariffs so much. It’s something he can impose as the president and put out there and pull back at a whim, basically impulsively. That’s what we’re seeing this week with this decision.
“And there’s some familiar with the patterns who say maybe the president is bluffing. There’s a period of time before they take effect,” Rucker said Friday. “Even the new president of Mexico suggested today that there’s a chance Trump could reconsider and pull back this threat before it takes place. I don’t know if that’s going to happen or not, but that’s also a consideration.”
These tariffs only will cause economic pain for Americans, according to a number of economists.
“This policy toward Mexico is incredibly stupid. It is both a tax on American consumers of billions of dollars. It is also a direct tax on American manufacturing. The people who are the most opposed to this, who are looking at each other saying, what are you talking about, are American automakers, because the cars they’re making in the United States employing thousands of Americans have high parts content that’s coming from Mexico,” said Austan Goolsbee, who served as a top economist in Barack Obama’s White House. “And it’s a tax on American car makers, not foreign car makers because more of our parts come from Mexico than Korean cars, Japanese cars, et cetera. This puts the um in dumb as they would say.”
At least one veteran Democratic lawmaker doubts Trump’s legal authority to impose tariffs on Mexico.
“Well, when I heard the news this morning, I was stunned. I thought, ‘What is this authority to do this?'” Rep. Zoe Lofgren (D-Calif) said. “And when I learned it was a 40-year-old bill that requires a finding of unusual and extraordinary threat, I thought, ‘You know, once again, the president’s idea of an emergency is something that he wants to do without the legal authority, just as he did with the wall and now the courts have stopped him.’ So, I think this is very questionable legally.
“He doesn’t have a lot of respect for the democratic system of government and the rule of law here, and I’m glad to hear that Senator [Charles] Grassley [R-Iowa] is also calling him on this.”
Grassley is among those usual Trump allies who not only criticized Trump’s tariffs but warned that they could jeopardize Trump’s follow-on trade agreement to NAFTA, known as USCMA.
“Trade policy and border security are separate issues. This is a misuse of presidential tariff authority and counter to congressional intent,” said Grassley, who has been in the Senate for decades and serves as chairman of the Senate Finance Committee. “Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country. President Trump should consider alternatives, such as imposing a fee on the billions of dollars of remittances that annually leave the United States to Mexico, which only encourage illegal immigration and don’t help the U.S. economy. It could fund border security measures and would put economic pressure on Mexico without imposing a financial burden on U.S. consumers or harming American jobs. I’ve long supported reforms to remittance law, which haven’t become law because of opposition from big banks and other financial interests.
“Mexico must help get the border crisis under control and the president should use appropriate authorities to apply pressure. I’ve also called for a Safe Third Country Agreement so that Mexico cannot simply pass the buck to the United States. Mexico has a leading role to play here when asylum seekers are traversing their country without regard to the law and without consequence. Congress must also immediately fully fund border security and interior enforcement,” Grassley added. “Democrats should come to the table in a reasonable way and work to put an end to the security and humanitarian crisis on the border. I support nearly every one of President Trump’s immigration policies, but this is not one of them. I urge the president to consider other options.”