Category Archives: Immigration

Trump Threatens up to 25 Percent Tariff on Mexican Goods, Jeopardizes NAFTA/USMCA

Things have been moving quickly on President Trump’s top legislative priority, the NAFTA/USMCA trade agreement. The key was rescinding steel and aluminum tariffs against Canada and Mexico. On Wednesday, Canadian Prime Minister Justin Trudeau moved to introduce the agreement to Canada’s legislature for ratification, prompting a Thursday visit from Vice President Mike Pence. Also on Thursday, Mexican President Andres Manuel Lopez Obrador introduced NAFTA/USMCA in Mexico’s Senate. He is requesting that the body, on recess until September, hold a special session to ratify it.

Within hours of Lopez Obrador’s announcement, President Trump may have torpedoed his own agreement. Shortly after markets closed, he threatened, via Twitter, a new tariff against Mexico that would dwarf the steel and aluminum tariffs:

1/2: On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,..

2/2:….at which time the Tariffs will be removed. Details from the White House to follow.

On July 1, the 5 percent tariff would rise to 10 percent. It would then rise by an additional 5 percent at the beginning of each month until reaching 25 percent on October 1. It would remain there until President Trump is satisfied with Mexico’s immigration policies. He did not set specific criteria for Mexico to meet. And as mentioned earlier, Mexico’s Senate is out of session until September. But the administration’s statement indicates that this threat isn’t entirely about immigration (capitalization of “tariff” and typewriter-era extra spacing between sentences in original):

If Mexico fails to act, Tariffs will remain at the high level, and companies located in Mexico may start moving back to the United States to make their products and goods.  Companies that relocate to the United States will not pay the Tariffs or be affected in any way.

By way of context, this tariff would be nearly twice as large as the recent 25 percent tariff on $200 billion of Chinese goods. Mexico annually exports roughly $346.5 billion of goods to the United States.

NAFTA and the NAFTA 2.0/USMCA both require near-zero tariffs among the three member countries. Trump has invoked the Jimmy Carter-era 1977 International Emergency Economic Powers Act as legal authority for the tariffs, claiming that that bill’s emergency powers supersede possible NAFTA violations.

As I’ve mentioned before, Trump has a habit of using dramatic last-minute threats as a negotiating tactic. Sometimes he follows through, as with the recent 25 percent tariff on $200 billion of Chinese goods. Sometimes he withdraws, as he did with a threat to close the entire U.S.-Mexican border, and an April threat of a 25 percent tariff on Mexican-assembled automobiles—which are often made largely of U.S.-made parts.

For obvious reasons, a new tariff against Mexico will not make its government more likely to ratify NAFTA/USMCA. Tariffs are usually met with retaliatory tariffs, not the policy action Trump wants. The U.S. economy is risking yet another instance of double damage from President Trump’s announcement—once from his tariffs, and again from retaliatory tariffs.

Further complicating matters, Mexican President Lopez Obrador largely shares Trump’s negative view of free trade. His support of NAFTA/USMCA is not deeply held. His going along with the agreement is largely a kindness to his predecessor, Enrique Peña-Nieto, who negotiated the agreement and signed it on his final day in office. Lopez Obrador’s NAFTA/USMCA support is easily lost, and this tariff gives him an easy out.

The tariff also complicates matters in America. Also on Thursday, President Trump issued a Statement of Administrative Action. This opens a 30-day waiting period, after which Trump can send NAFTA/USMCA to Congress at any time for a mandatory ratification vote within a set period (Politico has a handy timeline). Members from both parties opposed the steel and aluminum tariffs, and they will likely oppose the new tariff, which is potentially much larger. If Congress is required to vote, it may well vote no due to the new Mexico tariffs.

Democrats already hold the upper hand in negotiations due to the administration’s high prioritization of a low-stakes agreement; USMCA contains no major changes to trade policy. Even without Trump’s tariff threat, they could hold up the agreement to add trade-unrelated provisions to benefit favored labor and environmental constituencies. Or they could condition ratification on a more important matter, such as must-pass appropriations bills or other Democratic policy priorities such as health care or the minimum wage.

A new tariff is Trump giving Democrats free ammunition to hold up not just NAFTA/USMCA, but other administration priorities as well.

We’ll find out by June 10th if Trump walks back a major economic and political mistake, or goes through with it.

Bas van der Vossen and Jason Brennan – In Defense of Openness: Why Global Freedom Is the Humane Solution to Global Poverty

Bas van der Vossen and Jason Brennan – In Defense of Openness: Why Global Freedom Is the Humane Solution to Global Poverty

Argued from a philosopher’s point of view, though both authors are economically literate. They argue that the most effective poverty-relief policies involve positive-sum interactions. A more open approach to trade, immigration, and entrepreneurship are the most important positive-sum policies, and they back them with strong moral and consequentialist arguments.

People have the right to make deals with each other, or to move somewhere else if they like. For a third party to get in the way and forcibly stop them requires a very strong reason. The burden of proof is on that third party.

Conservatives and nationalists offer few strong justifications for their force-happy trade and immigration policies. Progressives also come off poorly for preferring zero-sum redistribution policies even when positive-sum policies are readily available. Both authors argue instead for a more permissive, open, and liberal approach–liberal in its original, correct sense.

Is This What Amnesty Looks Like?

You know a regulatory system is broken when this qualifies as liberalization:

Click here if the embedded video doesn’t work.

CEI Podcast for May 8, 2013: The Debate Over Undocumented Immigration

Have a listen here.

CEI Immigration Policy Analyst David Bier is critical of a new Heritage Foundation study that estimates that giving legal status to America’s undocumented immigrants would cost $6.3 trillion over the next 50 years.

CEI Podcast for March 7, 2013: The Three-Sided Immigration Debate

Have a listen here.

There are more combatants in the ongoing immigration debate than the usual progressives and conservatives. Immigration Policy Analyst David Bier recently wrote for USA Today about a third side in the debate: population control advocates who oppose immigration altogether.

GOP Evolving on Immigration

The hardline stance that many Republicans hold on immigration policy has long struck me as immoral, not just economically harmful. High-skilled immigrants are the most entrepreneurial group in America. Low-skilled immigrants not only improve their own lives by coming here, they improve everyone else’s by further refining the division of labor. Economics jargon aside, it is unethical for some people to decide where other, peaceful people may or may not live — and to use force to do so.

Tuesday’s election results are causing many GOP leaders to reconsider their nativist leanings. Just look at these Politico stories from the last 24 hours or so. Their sheer number is surprising, since immigration isn’t a particularly hot issue right now:

  • Haley Barbour urges immigration reform
    “[W]e are in a global battle for capital and labor, and we need to have what is good economic policy for America on immigration because we do need labor. We not only need Ph.Ds in science and technology, we need skilled workers and we need unskilled workers. And we need to have an immigration policy that is good economic policy, and then — and then the politics will take care of itself.”
  • Rick Santorum: GOP must reach Latinos
    “Yeah, I think we did lose a lot of [the] Hispanic vote,” he said. “I think one of the reasons [is], we didn’t talk about all the issues that that community, which, as all immigrant communities are, there are a disproportionate [number who are] middle and lower income who are trying to struggle to rise. We didn’t have a strong message for those folks. And I’m not just talking Hispanics, I’m talking writ large.”
  • Can Marco Rubio save the GOP on immigration?
    Rubio and his advisers are well aware of the risks: He must thread a needle as he tries to portray an open, tolerant party while not incensing the ultraconservative base who want tall fences, closed borders and nothing that looks like amnesty for illegal immigrants.
  • Krauthammer pro-amnesty, not citizenship
    “I think Republicans can change their position, be a lot more open to actual amnesty with enforcement — amnesty, everything short of citizenship — and to make a bold change in their policy.
  • Hannity: I’ve ‘evolved’ on immigration and support a ‘pathway to citizenship’
    “The majority of people here, if some people have criminal records you can send them home, but if people are here, law-abiding, participating for years, their kids are born here, you know, first secure the border, pathway to citizenship, done.”

This is big. I suspect that their motives for opening up are electoral, rather than from economic knowledge or humanitarianism. It could even be that they’ve always been on the tolerant side of things, but thought until now that saying so wouldn’t fly with the median GOP voter. I don’t much care if motives are pure or impure; results are what matters. It may have taken the GOP until Tuesday to learn that threatening mass deportation tends to alienate Hispanic voters, but at least they’re learning. And their new political calculus could result in positive reform.

Immigration is not the only issue where the GOP is evolving in the right direction. Aside from Rick Santorum and a few others (and even he’s coming around on immigration!), the party took great pains to de-emphasize its traditional stances on social issues such as same-sex marriage and drug prohibition. Given how those issues fared in a number of states, this was a wise move.

Going forward, it looks like the GOP will continue to restrain its worst impulses. They’ll become politically irrelevant if they don’t. The rising generation of voters is very tolerant on social issues, regardless of party affiliation. This is unlikely to change as they age. No going back now.

Usually I bemoan the fact in a democracy, voters get what they want. But on immigration and many social issues, this is turning out to be a good thing. At the very least, Republicans are becoming a little less noxious than they used to be. They’re certainly becoming a little less embarrassing.

CEI Podcast for October 11, 2012: More Americans

Have a listen here.

Policy Analyst David Bier thinks the world could use more Americans. And an easy way make happen is through increasing legal immigration. America’s superior economic institutions give immigrants the ability to create more wealth and value than they could in their home countries. Expanding legal channels would also curb dangerous immigration black markets for labor and human smuggling.