As President Donald Trump continues to use the threat of tariffs towards America’s neighbors, there remains palpable concern about its effect on working-class Americans.
Two prominent economists told The Daily Caller that Trump has overplayed his hand, and created economic anxiety that could hurt his chances at being re-elected next year.
The president has repeatedly threatened increased tariffs on Mexico in an attempt to coerce them into making a stronger effort to stem the flow of illegal immigrants coming through their borders. The tariffs on America’s neighbors to the south were set to take effect last month, before an agreement was reached, with Mexico reportedly agreeing to send thousands of troops to help solve the border crisis. The president then postponed the tariffs indefinitely.
While nearly everybody admits their is a crisis at America’s southern border, some are wary that the Trump administration may be cutting off its nose to spite its face. (RELATED: Ocasio-Cortez On Illegal Immigration: ‘I Don’t Care If You’re Documented Or You’re Undocumented)
“There are serious and legitimate complaints of the American administration concerning the way Mexico was (and is) handling the narco issue, illegal, Mexican and transnational, emigration, etc,” Polish economist and former diplomat Henryk Szlajfer told the Caller. “But the new tariffs will only aggravate the relations.”
Robert E. Scott of the Economic Policy Institute concurred, and offered even harsher criticism of Trump, slamming the agreement that the president claims will help solve America’s border crisis.
“There’s no evidence that Mexico is gonna do anything they weren’t already doing,” Scott told The Daily Caller of the agreement.
Neither Scott and Szlajfer are dogmatic free-traders, but their comments still represent a fundamental difference between many economists and Trump and his supporters. While populists on the right and left believe the trade imbalance is one of America’s most pivotal problems, some economists don’t even see a problem at all. (RELATED: New NAFTA On Hold Until Mexico Reforms Labor Laws, Says Pelosi)
“Taking into account the stormy, to say the least, history of U.S.-Mexico relations in longer perspective, the tariff policy of President Trump will only contribute to bitterness, misunderstanding, with dubious gains for the U.S. economy,” Szlajfer said.
“I think its entirely a self-created crisis,” Scott said. “We don’t have a trade problem with Mexico.”
But, even if the U.S. was facing such a crisis, Scott insists that tariffs aren’t a good remedy.
“As a general tool for reducing trade imbalance, they’re not useful,” Scott said.
Scott also insists that many of the problems that have lead to the crisis at America’s southern border were caused by the U.S. itself. He claims that decades of U.S. interference in Central American countries have made their political system untenable, forcing its citizens to flee for a better life, and implied that a more measured foreign policy could alleviate the amount of asylum claims the U.S. is currently managing.
“We don’t have an illegal immigration crisis at the border, we have a refugee crisis,” Scott said. “We have been backing oligarchs and military governments in this country for decades, and that has contributed to the crisis in these countries.”
Scott does concede the reality that millions of working-class Americans have seen their jobs shipped oversees, and that reality is a big reason Trump was elected president in 2016. Scott says tariffs can benefit domestic producers, but would be an economic disaster on the whole.
The bottom line, Scott says: Tariffs on Mexico would harm working and middle class Americans, while having little effect on Trump and his wealthy supporters.
“It could increase the cost of products by 10, 15, even as high as 50%,” Scott said.
These claims check out. Products produced in Mexico and consumed in the U.S. often move back and forth several times between countries before they become available in stores. If the U.S. were to institute a 10 or 15% tariff on all products coming in from the southern border, it would be charged every time that product crossed the border. (RELATED: Illegal Border Crossings Projected To Fall After Trump Tariff Threat Against Mexico)
This could significantly increase the prices of products that are considered a staple of day to day life for millions of Americans, including coffee, soy, wheat, avocado, and corn, among others. The impact could be devastating on average Americans, and has the potential to reverse most or all of the economic gains made during the Trump administration.
While this particular tariff threat has momentarily stalled, the early history of this administration tells us that won’t last long. Tariffs are the president’s go-to response whenever the U.S. faces an economic dispute with another country.
“It’s very hard to predict what he’s going to do,” Scott said. “There’s only so many times you can pull that trick out of your back pocket.”