Trump infuriated Mexico and Canada smack in the midst of attempting to get Congressional approval for USMCA, his NAFTA replacement.
The interesting detail of Trump’s latest tariff madness is that Trump went against the advice of his top trade adviser.
“Lighthizer is not happy,” an administration official, said. “This is something he’s talked about for a long time but people always talked him out of it.”
A spokesman for Mr. Lighthizer declined to comment.
Navarro Sides With Trump
President Trump’s trade adviser, Peter Navarro, told CNBC that Trump’s threat of new tariffs on Mexico came in response to that country’s “export” of “illegal aliens.”
Treasury Secretary Steve Mnuchin Also Opposed Tariffs
Administration sources say Mnuchin and Lighthizer opposed Trump tariffs on Mexico.
- The surprise decision to announce the tariff plan came as Trump was “riled up” by conservative radio commentary about the recent surge in border crossings.
- The opposition to the tariffs by Treasury Secretary Mnuchin and Lighthizer marked a rare moment of unity from two top administration officials with starkly different economic ideologies.
- “Look at what we are trying to do. This is actually a brilliant move by the president to get Mexico’s attention, to get them to help us, because so far they have just been standing by,” Navarro said.
- The tariff was pushed by adviser Stephen Miller, an immigration hawk, according to a source close to the White House.
Nearly 5 Million US Jobs Depend on Mexico
Texas and California are the top states.
Peter Schiff Chimes In
Mexican Peso Response
Manufacturing Integration
Stating the Obvious – Mexico Isn’t China
Lie of the Day
What the Heck Happened?
- Trump took advice from Peter Navarro and Stephen Miller rather than Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer.
- Tariffs move USMCA, Trump’s NAFTA replacement, firmly in the gutter.
- 5 Million jobs are at risk.
Three Key Points
- There can no longer be any doubt that Trump reacts emotionally, not logically.
- Trump is not playing some amazing 3-D mind game, he is an economically illiterate trade fool.
- Trump just proved to the world that no deal is safe, even deals he negotiates himself.
Point three is the most crucial. No one can trust Trump.
I firmly believe a recession will do Trump in.
If I am correct, then it is in the long-term interest of countries to react in such a way that steepens any recession.
China may cooperate in that effort.
Mike “Mish” Shedlock
Here’s the Trump [deceptive] words and [NON] logic. If USMCA is the “Greatest Deal Ever” then why would you “Trump” it by tariffs?? [Because every day is a new “best” adjective spewn festival.
might agree with everything you say in this article.
but not sure about your statement
” No one can trust Trump.
I firmly believe a recession will do Trump in.”
for Trump to lose an election would seem to imply that the Democrats
are going to win in 2020.
now that’s a highly remote possibility.
as for Trumps untrustworthiness; well that is like saying that he is not popular with certain interest groups,
(ie he pissess off A,B,C,D and E) then that mayce neither here nor there.
and it may well be what endears him to a lot of other people.
He’s already lost the popular vote once. Unprecedented disapproval ratings are a start. We shall see.
Oh the CONSTANT lying sure make him “endear[ing]”! “Trump denies he called Meghan Markle “nasty” even though there’s audio proving he did.” If I recall FactCheck has Trump at an average of 11 lies a day. Gotta like that, huh? (NOT)
You don’t have to win an election in order for the opponent to lose if. I still contend 2016 was.a classic case of one candidate losing. Trump may suffer that very fate come 2020.
If a tariff gets their attention and they take action, it will be worth it.
Two thousand illegal aliens crossing every day and all the big brains on this site can concern themselves about is the precious avocado price. Mexico is aiding and abetting the invasion.
Actually about a fourth of that, 521 illegals a day. Moreover, total illegals in the US is down >15% in last 9 yrs.
“President Trump made Mexico an offer they can’t refuse. Trust him. Tariffs increase 5% per month until the election or until the illegal invasion from Mexico comes to a dead stop.”
Ignorance of Economics of some on this board is even more amazing than Trump’s ignorance.
If Mexico closed the border (Trump threatened to), hospitals would not get supplies, and automakers Ford and GM could not get parts. That’s just a start. Mexico can hurt the US far more than the other way around.
Perhaps that even true with China, if it embargoed rare earths.
Regardless, China can play the long game, the US cannot.
Agreed 110% Much of the posts are false causal reductionism too. Of course, much of that starts from the top – E.g. Trump tying tariffs to immigration, that’s a causal stretch as well.
BTW, I should have labeled it “reductionist fallacy”, more thre clinical term.
But wait there’s more! Tariff Man moves some more chips on to the Global Tariff instability pile – now India too!
“Under the decades-old program – known as the Generalized System of Preferences – Indian companies were able to avoid some $5.7 billion in duties back in 2017.
The new standards will take effect June 5.
“I have determined that India has not assured the United States that India will provide equitable and reasonable access to its markets,” Trump said in a proclamation on Friday evening. “Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019.”
$5.7 bil. in new Tariffs against India now too! Geez, I’d have thought Trump would/could screw up a lot of ways but I never thought Tariffs would be his bridesmaid. The totality of the import instability and imbalances happening reminds me a bit of the OPEC embargo – in that this will be spiking costs across the board. Is he going mental? Why the pell-mell rushes on tariffs??
Mish, you haven’t been accurate enough over the past ten years to have such a high opinion of your knowledge and insight. This event will likely result in very little impact like every other dire prediction about trump. Economy is doing well and US soldiers are not coming home in body bags. President trump seems to be getting results so judge him on that basis.
The point is we will have to sacrifice by paying more but more likely not buying from Mexico and China because their prices aren’t as good. They have inferior products but people buy them because they are cheaper so it may be a good thing to pay more but get it from another Country which in turn hurts their employment and also a fear that once we get used to paying more we may also stick with the better and higher priced products.
Long ketchup, short salsa.
Mexico tariff is pure bluff,Trump talkin smack,if he wanted tariffs on Mehico why did he sign off on that USMCA farce?He knows tariffs south of the border will collapse the auto industry,virtually all vehicle parts come from Mexico via China,vehicle prices already rising 10-12% a year now!How are dealers gonna tack another 10%to the sticker price………short answer ….they can’t!
Trump is lashing out in frustration because he cannot solve this problem in Congress and the Courts are going to tie him up for years. A guy who managed casinos is taking a high risk with the economy. Mexico can stop the high degree of immigration quickly if they wanted to partner with the US on the issue. They may back down because the threat appears real.
If Trump fails its recession and even higher rates of immigration. Chaos in the south will make that happen. Trump still does not realize that he in not the CEO of the country.
People are flooding in here because the Democratic machine is running a propaganda operation in the south pushing these people to immigrate here along with their favored NGO’s who are helping people to push across the border in record numbers. They want the states to change over to their side and they know that this will do the trick.
Do not count Trump out, the egghead economists wrecked our system with their theories put into practice. Global free trade was always an illusion based on making things cheap and selling them into our consumer economy with big profits.
If Trump wrecks the economy that only outs him on par with the eggheads.
The true nature of our “4D chess playing” commander in chief:
Everyone is missing the 10-D chess move by Trump. Increase tariffs, US economy goes into recession, jobs lost, wealth disappears, illegals no longer come to a prosperous America. How can we not see the logic?
I wish DT would permanently close the border completely. I’d rather have a recession than tens of millions of invades who have already overcrowded and ruined our public schools, emergency rooms, highways and turned entire neighborhoods into foreign pest holes.
Close the border. End trade entirely. And return to “Made in the USA”.
President Trump made Mexico an offer they can’t refuse. Trust him. Tariffs increase 5% per month until the election or until the illegal invasion from Mexico comes to a dead stop.
“No agreement is safe with Trump”…
And by extension, fair to say “NO COUNTRY is safe”?
And “in case YOU have not figured this out”…
the USA is not excluded.
The degree to which an economy is “fair” is the degree to which an economy is “best”. The problem in the US is that for the last 50+ years, only two sectors have been even close to “fair”: low wage labor and the technical sector (which includes manufacturing). Every other industry has enjoyed unfair advantages such as ridiculous credentialing processes, massive government subsidies, citizenship requirements, and large scale bail-outs to name a few. So now Trump comes along and decides he’s going to stick up for the domestic manufacturers who have been the last man in the chain gang for multiple generations and everyone is a hooten and a hollering about how horrible it will be – and they are mostly right! Except it won’t be so bad for the manufacturer who will get to feel like most everyone has felt for ever so long. So, when we tire from the sting of higher prices as a result of not being able to take advantage of 3rd world slave labor and environmental regulation cheaters, let’s just call a truce and strip away all artificial moats and government interventions as we open up our markets to international trade again (as we ought). However, I don’t think most people want to play that game.
So, tariff away Trump!
There should be tariffs due to the US and Mexico having different environmental and labour laws, good luck determining what exactly those should be.
I have thought that USA is a democracy with check and balance. But what I see in reality is that Trump basically can do whatever he wants on this planet! Long live the greatest emperor!
Yesterday I wrote Trump wont make it to November of 2020 and some laughed. The odds that he doesnt complete his first term are going to rise as the crises he creates deepen. If it comes out that he is not of sound mind by his own cabinet then removal by his cabinet cannot be ruled out.
Its a great move.
Everyone wants to prevent a much needed wall. Well, this is needed.
Good on him.
Free trade is not a policy to be worshipped, but only used when appropriate for both sides.
America is a nation, not an economy.
Halfway through Donald Trump’s presidency, Israel’s decades-long role in Central America is scaling new heights of military and political influence.
No Agreement is Safe With Trump! (And Trump Just Proved It)
I am sorry that you are actually realizing that. Let see
The important thing here is not so much that he is a liar that can not be trusted. The important thing is that despite all of it you have 45% of the country that would vote for him again. If that is not a dysfunctional country I have no idea what is. BTW he will be another Chavez regardless of being from the right, left, middle bottom it does not matter he will destroy this country
You do not understand Trump: Trump is not playing 3D or 4D game with the world, he is playing 5D! He is clearly the greatest Emperor!
5D? noooo he is doing now 6D or was it 6G?
Sure, and Charles Ponzi invented infinite dimensional chess. Just keep signing up the lemmings!
Lol!
Augustthegreat, I believe you are a victim of message distortion.
I am fairly certain the original statement was…
“Trump likes to play with 34D or even 36DD chests”.
What is the 5th D?
I’m only aware of Dumb, Dumber, Dumbest and Dumber than Dumbest.
Mexico couldn’t stop the stampede at this point if they wanted to, and they don’t. Various estimates have the Mexican revenue per immigrant in the form of coyote payments plus cartel, police and Mexican army extortion at around $2,000 per immigrant. This represents a huge criminal constituency supporting trans-Mexican immigrant traffic while there is no Mexican political constituency opposing it.
Predictably, Mexican politicians have begun wrapping themselves in the flag and threatening 10% tariffs in retaliation. There is always a Mexican political constituency for anti-yanqui demagoguery.
The only viable option remains that we enforce our own laws, starting with E verify, not extort Mexico to enforce theirs with the threat of tariffs. We won’t be doing that because both national parties view immigration law enforcement as the third rail of campaign funding: Touch it and you’re dead. Campaign contributions from business (where the money is) will dry up overnight.
Okay, let me see if I have this straight. You think countries that will be hurt worse than the US, should cut off their nose to spite their face? It is not in their long-term interest, but it is in the US’s long-term interest to reduce the flow of ILLEGALS. With your logic, we should blow up our economy so immigrants will stop coming here for jobs. One question – how do you realistically propose to solve the problem, since you know the establishment CONgress does not want to solve the ILLEGAL immigration problem.
“With your logic, we should blow up our economy so immigrants will stop coming here for jobs.”
That’s exactly what Trump is doing numbnuts.
We need to stop the flood of Illegals coming here. I didn’t see you propose your alternative idea how to stop the flood or get Mexico to do it. Please tell everyone how you would handle it.
Trump said he would fix Immigration – that too was a “deal”. Because Paul Ryno betrayed him last year at the march shutdown, and because judges are blocking a lot of other things, TRUMP IS KEEPING THE DEAL WITH THOSE WHO ELECTED HIM in a rather blunt instrument way, but this isn’t an economic deal, Mexico refuses to stop the illegals and drugs from coming over the border.
Maybe you should stay in the Chicago “sanctuary” area so you can deal with all these illegals and help pay for them instead of fleeing for a lower expense state that doesn’t have to deal with the costs of this.
The only other alternative is to do things like bomb the roads, rails, bridges, and ports in Mexico to stop the flow ourselves. I don’t think you would prefer that.
Your assertion that bombing Mexico is only alternative to Trump’s stupidity is fucking dumb as hell.
And your alternative is?
How do you suggest we stop the flood of illegals and fentanyl that causes economic damage to the US that Mexico IS responsible for.
Congress and courts have blocked the usual things.
You don’t want tariffs.
You say that my alternative of military action (I forgot landmines and clusterbombs along the border) is a bad idea.
So what is YOUR solution? Nothing?
I propose castrate and release.
Trump 2020? Makes impeachment so much easier. If Trump was smart (hahaha, geeze I crack myself up) he would claim that he can no longer serve, as his bone spurs are acting up.
Actually, the reverse is true. It’s unlikely that the Senate would convict him even if the House impeaches him. On the other hand, if the Democrats win in 2020, it seems inevitable that he will be indicted. If he wins, it will be 2024 before he can be indicted, by which time they might not bother.
‘indicted’ for what exactly ?
It’s certainly possible that Trump is playing some 3D mind game. After all, remember, he was Democrat. I sometimes wonder if he’s a Trojan Horse, and his real purpose is to destroy the Republican Party. My prediction is that, as with Herbert Hoover, his legacy will be to leave the Democrats with a lasting majority in both houses of Congress, and no close contests in Presidential elections.
The only multiple “D’s” in Trump is the multiple counterproductive DIRECTIONS he tries go at once. E.g pull this Mexico Tariff out of his tail while still thinking USMCA could get passed. Not like immigration NOW needed to beat USMCA at THIS moment. Just a stupid contradictory impulse. In time we’ll all come to see the Emporer “wore no clothes” on trade, nor negotiating.
The way he is acting, could make one wonder if he didn’t make an off the wall bet with his buddy Bill Clinton, that he could become President. By simply acting singularly outlandish, while turning the volume of every “dumb-American” stereotype out there, up to 11.
Kind of like how L Ron Hubbard supposedly started the somewhat similarly cultish Scientology movement, over a bet that he could get wealthy by starting his own “religion.”
Countries and companies are walking away from the US because of Trump. Moreover, this was SO untimely. Not like immigration is all that different today such that he could not wait until getting UCANME passed. Now he’s pissed that down the drain. WT*, burn bridges as fast as we can try and make them?
“The “new threats of U.S. tariffs on Mexico – even as passage of the new USMCA seemed to be getting closer – is a reminder that no trade agreement or past indications of goodwill is really full protection against a re-emergence of tensions with the U.S. under the Trump administration, ” said Nathan Janzen, an analyst at Royal Bank of Canada, in a research note. “That uncertainty will remain a headwind for business investment spending in particular.”
So if he succeeds in crashing the Mexican economy then guess where the Mexican unemployed will be heading?
Wasn’t it 5 seconds ago Trump removed tariffs on steel from Mexico?
Interesting to see Mish talk common sense and then the Trump cult members respond with their blind adoration of their Messiah. They cannot be reasoned with because their beliefs are those of a religious belief in their Savior. In fact they would probably prefer that the US economy is completely destroyed before seeing their cult leader dethroned.
“Interesting to see Mish talk common sense and then the Trump cult members respond with their blind adoration of their Messiah.”
He’s nobody’s Messiah. The thing with Trump is he sticks it to the people around him, but does what his voters want, more or less. Whereas people like Bush, McCain and Romney (Bushco) were great to the people around them (and the Democrats), while sticking to it the voters who cast ballots for them. What’s worse Bushco would not only screw their voters – they’d also insult them for wanting what they wanted. GOP voters wanted immigration restriction – Bushco gave them tax cuts for the rich, war crimes prosecutions for contractors and soldiers who fought their wars and prison sentences for conscientious border patrol officers.
It’s lose – lose if you are in the top exploiting the labor, regulatory and environmental cost difference in Mexico. Although if 5% tariff kills you, your business model sucks.
It’s also a loser if you’re exploiting illegals to keep US labor costs down.
For the rest of us, It’s likely a win -win.
Mexican tariffs are scheduled to increase to 25% on 1 October and continue to increase gradually until illegal immigration across the Mexican border ends. The Mexicans should start building a wall.
President Trump told GM and Ford not to move manufacturing to Mexico. Both companies closed manufacturing in USA and opened new manufacturing in Mexico. These tariffs are punitive on GM and Ford.
The ‘gradual tariff increase’ is 25% in four months. At that rate auto tariffs would be 100% on election day unless GM and Ford announce plant closures in Mexico and new manufacturing in the swing states: Ohio, Michigan, Minnesota. Iowa, Wisconsin.
How are higher consumer prices due to tariffs (a tax increase on US consumers in practice) a win-win?
Higher consumer prices reduce the value of minimum wage toward the value of unskilled labor. Minimum wage labor becomes cost effective and promotes reshoring jobs. Soon as we get the dregs off welfare and into jobs we can collect more taxes, cut off all welfare, and balance the budget. Win Win Win.
This will have the opposite impact Trump thinks it will. Illegals are coming into the country at unprecedented rates BECAUSE of Trump’s promise to build a wall. They think that if they’re going to get in, they better do it now. Putting economic pressure on Mexico is only going to increase the desire of illegals to head north. This is stupidity on an unprecedented scale.
But I disagree on a recession doing Trump in. Trump is running unopposed in the Republican Party. And the Dems will end up putting Joe Biden against him. I don’t know anyone who would actually skip having a tooth pulled to go vote for Biden.
So 4 more years of lunacy. Best to just hunker down.
Democrats are calling for open borders. Democrats are inviting a surge in illegal immigrants. Democrats are running sanctuary cities, encouraging a surge in illegal immigrants.
Caravans are being organized. Who is funding and organizing those?
Mexican illegal immigration has precedent in both scale and stupidity. Russian Jews massively invaded Germany at the same time they were routinely defenestrated from office buildings. We all know how that ended.
It is not a lose-lose policy if Mexico cuts down on the illegals coming into this country.
America First?
This is lose-lose policy
Every corporation loses unless they reshore to USA. American job seekers and paychecks win. On balance the votes are with the paychecks not the stock certificates.
Your comments are such a display of ignorance that I can only think you are just a troll. You know what other country decided many decades ago that everything must be made by them Brazil. And we all can see how Brazil became a superpower… BTW if they reshore they will be reshoring with full automation. BTW when corporation do not make their numbers and the stock goes down, the CEO fire the workers up to the point where the saving match the cost of the tariff. I need to explain this to you because I get the feeling you never left your parents basement.
Superpowers are created by rewarding those who create wealth and punishing the indigent consumers of wealth.
Automation creates wealth faster than manual labor. Automated factories hire talented engineers, programmers, and maintenance staff. Good jobs and good pay reward those who worked hard in school to make themselves valuable.
Bureaucrats expand their empire to use available profits. Every corporate staff needs culling. Layoffs are good efficiency.
Trumpty DUMBty, is that you?
“Superpowers are created by rewarding those who create wealth and punishing the indigent consumers of wealth.“
This is actually false and anyone who has any knowledge of history knows it is false.
“Every corporate staff needs culling. Layoffs are good efficiency.“
And again anyone who knows about history knows this is how bloody revolutions start
They won’t “reshore” to the US. They’ll move to Vietnam, India, and possibly the Southern Hemisphere. Anywhere they can find sub-$5.00 a day wages.
Okay fine – there shouldn’t be any expectation that all of the lost manufacturing jobs will return stateside. The goal should to be decoupling from China to the greatest extent possible. China is indisputably a threat to global security. Move those manufacturing jobs out of China to Vietnam or elsewhere. Start sourcing rare earths domestically or from places other than China. China is trying to bury us – we must bury them first. Our shovel is lot bigger.
Yep the US shovel is a lot bigger . . . problem is that all those little shovel working against us . . . China, Mexico, Canada, EU, etc together get a lot more moved . . . starting a multi front war is ALWAYS a bad idea . . .
A clear case of America first, Mexico and California second. ☺
First what? To be shot in the foot?
“First what? To be shot in the foot?”
De-industrialization has resulted in a 24% increase in the number of suicides in Ohio.
I grew up in rust belt Ohio and still go back to visit family. De-industrialization is there to stay, tariffs or no.
“Mexico and California second”
They are just one region now, no?
……And Americans at best third…….