Friday, January 27, 2017

US Heading For Trade War With Mexico?

The executive orders were signed just as Mexico's Foreign Minister Luis Videgaray arrived at the White House for negotiations. As expected, the spat escalated with Pena Nieto canceling his trip. The hallmark of balanced President is solid negotiation skills. One cannot negotiated if there's no meeting.

Trump's tweet, taken as a lack of flexibility, likely cancelled the meeting.

"The U.S. has a 60 billion dollar trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers... of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting," Trump said in his Twitter message.

The next step could easily be a tariffs (border taxes) on Mexican or global goods against the warnings from history (1,2). The time is now for discussion about the use of border taxes or similar short-term policies designed to overcome longer-term structural problems.

Contrary to popular opinion, a wall will not end the immigration, drug, or economic crisis that plagues the United States. An escalating public spat reduces the chances of productive private discussion outside the prying eyes of the media.

Headline: Mexico president cancels Trump summit as wall taunt deepens spat

MEXICO CITY/PHILADELPHIA (Reuters) - Mexico's president on Thursday scrapped a planned summit with Donald Trump in the face of insistent tweets from the U.S. president demanding Mexico pay for a border wall, a deepening spat that threatens Mexican efforts to salvage trade ties.

However the White House left open the door for a possible rapprochement. White House spokesman Sean Spicer said the United States was keeping open lines of communication with Mexico and looking to reschedule the meeting.



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