And what might those be, you ask? Ill-conceived. Ill-timed. Ill-advised.
President Trump’s announced Friday that the U.S. will impose graduated tariffs on Mexican imports into the U.S. in order to stem the inflow of Latin American immigrants from the southern U.S. border.
It’s ill conceived because there are too many issues with China and Europe to invoke more tariffs against Mexico. There is a genuine effort to improve U.S. corporate supply lines by moving production to Mexico from Asia.
It’s ill timed because Mexican President Amlo is trying to improve the financial landscape for Mexico, as well as using his mandate to attack the endemic corruption that has plagued Mexican society and business for so many decades. AMLO needs support, not attacks. It would seem that President Trump would look to build an infrastructure supply-line with a much more efficient geographical factor.
And it’s ill-advised because the basis of NAFTA was to build a North American behemoth based on Mexican labor, U.S. markets and technology and natural resources of Canada. Now that Congress is close to voting on USMCA why attack the structure by using the threat of tariffs?
Yes, immigration is a serious issue but as the White House has trumpeted for the last six months Chinese trade is the most important problem for the U.S. to confront. It has been reported that even USTR boss Robert Lighthizer is opposed to tariffs on Mexico, which is probably why the original import tax was only 5%.
In Sunday’s post I’ve included a podcast from the Financial Repression Authority, which I recorded on Wednesday with Daniel Lacalle. We do a deep dive into Europe and discuss Mexico, pre-tariff announcement. Enjoy.
Link to Financial Repression Authority podcast
Tags: Canada, China, Europe, Mexico, NAFTA, Robert Lighthizer, trade, U.S., USMCA
June 2, 2019 at 5:34 pm |
Thank you keep it up maybe someone is listening in DC; hope there is some method to the madness!
June 2, 2019 at 5:53 pm |
Since Mexico got pushed..again.
It seem in Colombia we will at some time be hit with a cocaine tariff as well because our local authorities have not been able to curb supply, yet nothing is curving demand in the US. If Trump did this it would hurt his local political allies and help the socialist leftist cause.
June 3, 2019 at 9:36 am |
Personally, my suspicion was Trump would chimp out on trade but no, he’s turning up the heat significantly?
It’s become unclear to me which electorate supports contraband more, I was under the assumption disagreement encompassed this subject.
June 3, 2019 at 5:38 pm |
Notable volume spike on the FLR.
June 3, 2019 at 8:26 pm |
Chicken–I am buying some here but my conviction is not great because of the overall condition of the market
June 4, 2019 at 10:37 am
I suspected you were up to something.. 😉
June 4, 2019 at 8:16 am |
If Uncle Stanley can through in towel for a while is that a prudent thing to do thing if you can’t beat em join em?
https://www.cnbc.com/2019/06/04/stan-druckenmiller-bought-treasurys-after-trumps-may-china-tweet.html
June 4, 2019 at 10:31 am |
I dunno, if the UK can be persuaded to cancel brexit then perhaps?