Trump made USA confused. Again

Photo - Flickr
Photo - Flickr
Friday, 31 May, 2019 - 12:30

The USA are uniquely generous with trade taxes. The first to bite the dust were China, now it’s Mexico on the firing line with their refusal to pay for the border wall construction. Now all the goods imported from Mexico are taxed by 5%. It seems to be enough to afford Trump’s long-promised dream before the end of his presidential campaign.

Mexico’s president was confused, though. “Social problems are not solved with duties or coercive measures”, Andrés Manuel López Obrador wrote in the open letter published on Thursday. – The Statue of Liberty isn’t an empty symbol”, he concluded, reminding the Americans of their own emigration history. The president also claimed that to reach an agreement people have to negotiate and discuss, for any economical measure can flow into financial calamity for both sides.

The Mexican are not the only one unhappy with the decision. Chuck Grassley, the US’ Senator from Iowa State, called the chosen strategy flawed. “Trade policy and border security are separate issues”, said Grassley. Still, the idea has its supporters – those are the ones set against the Mexican immigration in the first place. Stephen K. Bannon, former White House chief strategy specialist is assured Mexico had more than enough time and possibilities to make the situation better. “The ratcheting up to 25 percent will get their attention”.

The measure is not only obvious, but the easiest one. He’s imposing an economical showdown: if the immigration flow doesn’t stop, the country’s economy will sustain losses. The first effect is already there: the Mexican peso has fallen, the shares of Japanese auto manufacturers have fallen too – many of the plants are operating on Mexican territory. Mexico is expected to impose counter measures which might stall the delivery of agricultural products, cars, cheap clothing, fuel, machinery and medical equipment.

White House will estimate success of the imposed measure by number of people crossing the border – the number which is expected to decrease substantially. Mick Mulvaney, the acting White House chief of stuff, explained that estimation will happen “day by day, week by week”.

The tax is expected to be reenacted on 10th of June. By October, the 5% tax will increase to 25%.