On the Mexico Tariffs

Donald L. Luskin
Friday, May 31, 2019
This one’s for the base. Trade war, meet immigration war.
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Trump has announced tariffs on US imports from Mexico, starting at 5% and increasing to 25% until Mexico cooperates in stopping illegal immigration across the US southern border. At full strength, the tariffs will nominally cost American buyers $93 billion per annum, but surely some or all of that would be offset by peso weakness. Trump’s authority comes from the International Emergency Economic Powers Act of 1977. But the tariffs may be judicially delayed or blocked, which Trump actually may prefer, as this draws more attention to this bold move around a hot-button issue for his base. This appears to complicate Congressional approval of USMCA, but may instead give Trump more ways to win and something to bargain away. It helps in the trade negotiations with China as a sign that Trump doesn’t fear living with tariffs, and burnishes his “table image” as an unpredictable and bold opponent.