Trump to hit Mexico with tariffs in anti-immigration measure

Yekcidmij

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Trump to hit Mexico with tariffs to halt migrants

"US President Donald Trump has announced tariffs on all goods coming from Mexico, demanding the country curb illegal immigration into the US.

In a tweet, Mr Trump said that from 10 June a 5% tariff would be imposed and would slowly rise "until the illegal immigration problem is remedied..."​

A couple of my thoughts:

(1) This only hurts US manufacturing and US consumers (see "Wealth of Nations", by Smith, Adam :) ). It's ultimately US consumers that pay the price of tariffs - this is a new tax on Americans, not Mexicans.

(2) This seems like it could be counterproductive. The Mexican government hardly has the source of funds or revenue that is in any way comparable to the US. Trying to raise costs on the Mexican economy could reduce their governments revenues making it even more costly to try to help enforce US immigration policy and make any problem worse.
 

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Why do you think this decision should be made for everyone else? I mean, if you personally want to suffer financially immigration issues, then that's your business, but to force that on everyone else for political purposes is...
Whats the political purpose?
 
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SoldierOfTheKing

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(1) This only hurts US manufacturing and US consumers (see "Wealth of Nations", by Smith, Adam :) ). It's ultimately US consumers that pay the price of tariffs - this is a new tax on Americans, not Mexicans.

It's Mexican exporters that pay the tariffs. Some of the cost is passed on to US consumers - if they continue to purchase Mexican goods.

(2) This seems like it could be counterproductive. The Mexican government hardly has the source of funds or revenue that is in any way comparable to the US. Trying to raise costs on the Mexican economy could reduce their governments revenues making it even more costly to try to help enforce US immigration policy and make any problem worse.

But the tariffs are being imposed because they're not cooperating. If they can show that they're changing their policy, the tariffs can go away.

Why do you think this decision should be made for everyone else? I mean, if you personally want to suffer financially immigration issues, then that's your business, but to force that on everyone else for political purposes is...

Immigration issues affect us all. We're in this together, like it or not.
 
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-57

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I would assume something to do with immigration policy as he stated. I'm also noting that you're avoiding my question.
Just trying to understand your statement.

We seem to have an immigration policy issue. So does Mexico at the southern border.
 
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Yekcidmij

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It's Mexican exporters that pay the tariffs. Some of the cost is passed on to US consumers - if they continue to purchase Mexican goods.

I think neither theory nor empirical data support your idea. I dont think you account for real exchange rate effects, impacts on supply chains, impacts on domestic prices, impacts on real GDP, impacts emloyment, real incomes, or the actual effectiveness of the policy.

"What does the macroeconomy look like in the aftermath of tariff changes? We estimate impulse response functions from local projections using a panel of annual data that spans 151 countries over 1963‐2014. Tariffs increases are associated with persistent economically and statistically significant declines in domestic output and productivity, as well as higher unemployment and inequality, real exchange rate appreciation and insignificant changes to the trade balance. Output and productivity impacts are magnified when tariffs rise during expansions and when they are imposed by advanced (as opposed to developing) economies; effects are asymmetric, being larger when tariffs go up than when they fall. Results are robust to a large number of perturbations to our methodology, and hold using both macroeconomic and industry‐level data. "

source: http://faculty.haas.berkeley.edu/arose/Tariffs.pdf

"This paper explores the impacts of the Trump administration’s trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete pass through of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries."

source: https://www.princeton.edu/~reddings/papers/CEPR-DP13564.pdf

"We analyze the impacts of the 2018 trade war on the U.S. economy. We estimate import demand and export supply elasticities using changes in U.S. and retaliatory tariffs over time. Imports from targeted countries declined 31.5% within products, while targeted U.S. exports fell 11.0%. We find complete pass-through of U.S. tariffs to variety-level import prices. Using a general equilibrium framework that matches these elasticities, we compute the aggregate and regional impacts. Annual consumer and producer losses from higher costs of imports were $68.8 billion (0.37% of GDP). After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss was $7.8 billion (0.04% of GDP). U.S. tariffs favored sectors located in politically competitive counties, but retaliatory tariffs offset the benefits to these counties. We find that tradeable-sector workers in heavily Republican counties were the most negatively affected by the trade war"

source: https://www.econ.ucla.edu/pfajgelbaum/RTP.pdf

But this is in line with what economic theory already predicted starting [at least] with what Adam Smith wrote against in the Wealth of Nations. Trump's tariff policy is basic economic ignorance in line with the basic economic ignorance of AOC.

See also:
The macroeconomic implications of a global trade war | VOX, CEPR Policy Portal
https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_201961-1.pdf
4.9 Tariffs – Principles of Microeconomics


But the tariffs are being imposed because they're not cooperating. If they can show that they're changing their policy, the tariffs can go away.

I'm aware of why they're being imposed. I simply think the reasoning is wrong.

Immigration issues affect us all. We're in this together, like it or not.

I'm not sure exactly what your point is. I'm not sure how you think "immigration issues affect us all" or why that effect means people have to "suffer financially" (as someone else on this thread said). I'm not sure why a policy of tariffs should follow from a vague belief that "immigration issues affect us all." I'm also not sure why you should require everyone to "be in this" with you to the point of harming people who don't think they're in this with you or don't want you forcing them into your boat. And I think it makes no sense once you consider the actual impact and ineffectiveness of the policy, which I don't think you will be able to argue against.
 
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His student

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A couple of my thoughts:
(1) This only hurts US manufacturing and US consumers (see "Wealth of Nations", by Smith, Adam :) ). It's ultimately US consumers that pay the price of tariffs - this is a new tax on Americans, not Mexicans.
It doesn't "only" hurt Americans but it does hurt us more than Mexico. Nothing new there - the same is true for the hoards of Central Americans that Mexico is aiding in their migration.

(2) This seems like it could be counterproductive. The Mexican government hardly has the source of funds or revenue that is in any way comparable to the US. Trying to raise costs on the Mexican economy could reduce their governments revenues making it even more costly to try to help enforce US immigration policy and make any problem worse.
The Mexican government has plenty of troops and resources to stop the migration from crossing their Southern border in the first place and definitely enough to stop illegals along the way.

Lack of resources is not the problem with Mexico. It's open reliance on money flowing south from illegals is a major part of the problem. Even with those from Central America they are facilitating - it comes to the same problem. Mexico knows that if the U.S. resources being spent on them are freed up - they will likely be then used to stop Mexican illegals.

If Mexico doesn't like the tariffs (whomever they hurt the most) - they need to play ball with us.

If someone doesn't play nice with another person, they can't expect that person to continue to play nice with them.

Trump simply plays by that simple rule - unlike many other U.S. presidents who had played games in Washington for too long and were replaced by the people with someone who knows how things work in the rest of the world.

Why do you think this decision should be made for everyone else? I mean, if you personally want to suffer financially immigration issues, then that's your business, but to force that on everyone else for political purposes is...
That's simply the way it works in a representative republic.
 
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Yekcidmij

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It doesn't "only" hurt Americans but it does hurt us more than Mexico.

The studies cited above indicate that the cost of tariffs is passed onto US consumers. In other words, US consumers pay the price, not Mexican exporters. This happens in a few ways, which are also discussed in the studies above. Importers can raise prices and pass the cost off to consumers in that fashion. Importers can eat the cost increase, but this results in other macroeconomic effects like hiring less, substitution effects, decreases in economic output, decreases in real incomes, etc... Exchange rate movements can also offset the policy, and since the USD/MXN exchange rate was up about 3% right now (I don't know how that will hold in the days to come though), the exchange rate movement alone almost offsets the policy.

Macroeconomic Consequences of Tariffs

If Mexico doesn't like the tariffs (whomever they hurt the most) - they need to play ball with us.

Maybe that's an effective approach to get people to cooperate with you: do what we require or we hurt our own consumers. I guess we'll find out.
 
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SoldierOfTheKing

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---SE---

I'm not sure exactly what your point is.

You cite academic works by economics professors, but you are incapable of understanding the simplest arguments if they are inimical to your worldview? Interesting.

I'm not sure how you think "immigration issues affect us all"

By the fact that we all live in the United States...

I'm also not sure why you should require everyone to "be in this" with you to the point of harming people who don't think they're in this with you or don't want you forcing them into your boat.

If you don't think that immigration is a matter that concerns us all, that's your affair. It has nothing to do with the objective reality of the situation, and isn't a basis for public policy. You may not see the common interest, but nonetheless, there it is, and the common interest comes before any personal interest.
 
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Robin Mauro

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It's Mexican exporters that pay the tariffs. Some of the cost is passed on to US consumers - if they continue to purchase Mexican goods.



But the tariffs are being imposed because they're not cooperating. If they can show that they're changing their policy, the tariffs can go away.



Immigration issues affect us all. We're in this together, like it or not.
Actually, it is the U.S importers that pay the tariffs, then raise prices on us
 
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Yekcidmij

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Actually, it is the U.S importers that pay the tariffs, then raise prices on us

So the costs are passed to the consumer. So consumers pay the tariffs. Importers just serve as a pass through entity for tariff collection.
 
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Yekcidmij

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You cite academic works by economics professors, but you are incapable of understanding the simplest arguments if they are inimical to your worldview?

Which argument is that?

If you don't think that immigration is a matter that concerns us all, that's your affair.

I would have said if you believe tariffs are a positive and effective policy, much less as a specific response to any perceived immigration issues, then that's your affair. At least I'm not imposing a tax on you for my position.

It has nothing to do with the objective reality of the situation, and isn't a basis for public policy. You may not see the common interest, but nonetheless, there it is, and the common interest comes before any personal interest.

Tariffs are in the common interest? And the common interest always comes before personal interest? I'm not sure this principle is defensible.
 
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Quasiblogo

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"This only hurts US manufacturing and US consumers". Precisely why the tariffs must be implemented--to tell the federal government of Mexico, "Ya Basta!" (enough!). Otherwise, it will be tariffs hurting a diluted U.S. population and inconveniencing a growing, illegal population.
 
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Hi SOTK,

You wrote in an earlier post:
It's Mexican exporters that pay the tariffs. Some of the cost is passed on to US consumers - if they continue to purchase Mexican goods.

Do you know who pays import tariffs? If Walmart wants to have 5,000 lbs of oranges shipped from Mexico to the U.S....wait for it...Walmart pays the U.S. gov't. any tariff fee before those oranges are allowed to cross the border.

The United States imposes tariffs (customs duties) on imports of goods. The duty is levied at the time of import and is paid by the importer of record. ... Certain types of goods are exempt from duty regardless of source. A tariff is a border tax on the buyer, not the sellertariffs make it more expensive for a buyer to import a good into the country. The specific mechanism is that the US importer must pay the tariff to US Customs before the goods are released to the importer at the border.

No wonder so many people think that these tariffs are good. Most of his folks don't understand how they work. BTW you can google all this information as easily as I did.

God bless,
In Christ, ted
 
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