tags: , , AVEF, Press Releases

From “closing the border” to “incremental tariffs,” two threats never realized

Share This:

The recent temper tantrum of President Trump, when he threatened to “close” the southern border if Mexico did not stop the movement of migrants and drugs, was stopped in its tracks not by this leader’s own lack of negotiating prowess, but for a simple and at the same time complex fact that concerns us all: the economic reality of a strategic geographic zone, perhaps the most dynamic in the world, which would have lost between $1.5 and 2 billion on a daily basis had the threatened closure gone forward.

It was expected that such a temper tantrum was not the last one and, as throughout the campaign, would give rise to yet another one —that is, “scaring them with the dead man’s backpack,” an empty threat— to let his base know that he is still in charge of a White House that seems to function only through threats and tricks.

In reality, he failed once again through the same formula of threats —which is by now so obvious as to be, frankly, ridiculous— to impose this time, in a newly unilateral way, an incremental tariff of 5% on all products originating in Mexico, unless this country puts a stop to the passage of undocumented immigrants through its territory on their way to the United States.

Having accused Mexico of “doing nothing” to that end, looking for an obvious confrontation that really had no rhyme or reason, resulted in a counterproductive situation because it never took into account the diplomatic channels that his neighbor to the south has always employed throughout history as a strategy to resolve international controversies, regardless of who the president may be and what his ideologies are. By law and by principles.

But that’s not all: suddenly the economic realities of the region exploded in his face and made him retreat, since despite the grave inequities in the distribution of wealth, as a nation, Mexico is considered ninth out of 221 countries when it comes to exports, with more than $400 billion per year, importing more than $350 billion, with a trade balance in their favor of approximately $60 billion, according to the Observatory of Economic Complexity (OEC).

That is why imposing a 5% tax on Mexican products would have had an unstoppable negative chain-reaction, with consequent imbalances and price instabilities, which would have resulted in chaos and ruin for many involved, especially the United States, in addition to the political cost that it would represent for Trump’s ambitions to remain president another four years.

In fact, the main exports from Mexico are automobiles and automobile parts, sectors that by themselves represent some $45 billion and $28 billion, respectively, according to OEC data through 2017. Not to mention the more than $22 billion in computers and more than $19 billion in crude oil.

Of course, on the other hand, Mexico’s principal imports similarly include vehicles parts, at more than $25 billion; refined oil, at more than $23 billion; cars, at more than $11 billion, and computers, exceeding $9 billion.

That is, the changes would have been back and forth, such that their consequences would have been spoiled a bilateral neighborliness that, it has to be said, has not always been an easy road, especially since Mexico has had the United State as its primary destination for products, representing some $300 billion, again according to the OEC.

All these numbers are here to provide context for the true heart of the matter, which surely guided a good part of the negotiations between the Mexican and U.S. delegations, whose result the Trump administration claims as a “victory.”

However, in reality, things were simply settled by relying on common sense and a lot of expertise on the part of the Mexican negotiators, who appeared to accept an “agreement” to send 6,000 agents from their newly-created National Guard to the border with Guatemala to stop the passage of migrants, when according to reports from The New York Times, this had been part of a negotiation headed up by then-secretary of DHS, Kirstjen Nielsen, and Mexican Interior Secretary Olga Sánchez Cordero.

The fact is, the bet made through Mexican diplomacy in order to dilute the latest threat from Trump was, beyond a prior knowledge of the situation and what could be negotiated through official and unofficial channels, also the economic reality of these geographically inseparable countries. Mexico unlocked this mess that the President of the United States is claiming as a personal victory, something that of course the others will let him continue to think in order to satisfy his ego, but above all so that things continue moving forward in a normal way, without these curious and at the same time disturbing threats from a leader who uses the media in order to distract and divide —without realizing that, at least in this instance, he has been spoon-fed like a baby.

Of course, he does the same to others with the very essence of his threats, in order to remain in the political graces of those who still follow him.