TRUMP APPLIES TARIFFS TO MEXICO AND WITH THIS STARTS A TRADE WAR

President Donald Trump signed an executive order invoking the International Emergency Economic Powers Act (IEEPA), which gives him the power to raise tariffs because he considers the entry of illegal immigrants and drugs that “kill our citizens, including fentanyl”, to be a “major threat” to the country.

We reproduce the post on his Truth Social network where he announces this measure.

Today, I have implemented a 25% Tariff on Imports from Mexico and Canada (10% on Canadian Energy), and a 10% additional Tariff on China. This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl. We need to protect Americans, and it is my duty as President to ensure the safety of all. I made a promise in my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favor of it.

Trump also accused a “tariff lobby” led by “globalists” mainly from the Wall Street Journal, who lobby in favor of Mexico, Canada, and China, countries on which Trump has imposed tariffs.

The “Tariff Lobby,” headed by the Globalist, and always wrong, Wall Street Journal, is working hard to justify Countries like Canada, Mexico, China, and too many others to name, continue the decades long RIPOFF OF AMERICA, both with regard to TRADE, CRIME, AND POISONOUS DRUGS that are allowed to so freely flow into AMERICA. THOSE DAYS ARE OVER! The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the “Stupid Country” any longer. MAKE YOUR PRODUCT IN THE USA AND THERE ARE NO TARIFFS! Why should the United States lose TRILLIONS OF DOLLARS IN SUBSIDIZING OTHER COUNTRIES, and why should these other countries pay a small fraction of the cost of what USA citizens pay for Drugs and Pharmaceuticals, as an example? THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID. WE ARE A COUNTRY THAT IS NOW BEING RUN WITH COMMON SENSE — AND THE RESULTS WILL BE SPECTACULAR!!!

The government of President Claudia Sheinbaum had managed to stop the imposition of tariffs in the first days of the Trump administration, by accepting all the demands on migration. From what is now known, there was already a permanent negotiation with the State Department to see what measures the Mexican government would take on this issue and in the fight against drug trafficking. There was a certain confidence in the Mexican authorities that the willingness of the Mexican government to cooperate on both issues with the Trump administration would avoid the imposition of tariffs, but that has not been the case.

In addition, Trump accused the Mexican government (in the executive order he signed) of being in collusion with drug cartels, a very harsh and unusual accusation in the history of relations between Mexico and the United States, especially since the free trade agreement between both countries and Canada came into force on January 1, 1994; and its successor, the USMCA, on July 1, 2020.

President Sheinbaum responded by denying her government's relationship with the cartels, and in turn, accusing the armories in the United States that provide weapons to drug cartels of being in collusion with these criminal organizations.

Likewise, Sheinbaum said that the main problem is drug consumption in the United States that is not addressed, as well as the distribution and sale of drugs on the streets of the main cities of the United States, which, along with money laundering from these activities, is also not addressed by the United States authorities in its territory.

Sheinbaum reiterated her willingness to dialogue and negotiate with the Trump government on matters of security and migration, but also instructed the Secretary of Economy, Marcelo Ebrard, to respond with "tariff and non-tariff measures" to the imposition of tariffs by the United States government, which will begin to apply starting next February 4.

For his part, Canadian Prime Minister Justin Trudeau announced that he would respond with 25% tariffs on imports from the United States and that he will coordinate with the Mexican government to provide a joint response to the Trump administration.

However, anticipating this response from Mexico and Canada, Trump included in his executive order that if Mexico, Canada, and China apply tariffs to the United States, the response will be a new increase in tariffs, which implies an escalation of retaliation and counter-retaliation, that is, an open trade war between the United States and its two main trading partners.

WHY IS TRUMP DOING THIS?

For allied governments of the United States, a significant part of the business sector of that country, specialists, academics, intellectuals, etc. it is neither economically nor strategically sensible to engage in a trade and diplomatic conflict with its neighbors and main trading partners, including military ally Canada.

What then explains these measures, statements, and attitudes of Trump towards Mexico and Canada?

In the case of Mexico, it is clear that since his first presidential term, both Trump and the social base that supports him have seen it as the main source of problems for the society and economy of the United States: illegal immigrants who put pressure on services such as education and health in communities; they are also a source of insecurity (rapists, criminals, thieves); they are poorly qualified and therefore receive very low salaries that put downward pressure on the salaries of Americans; they later bring their families, who do not contribute to the economy, but are a burden; they may be linked not only to criminal organizations but to terrorist groups; they bring a culture, language and customs different from those of the Americans.

In terms of security, drug cartels dominate up to a third of Mexican territory and are protected in collusion with the Mexican government itself; they send dangerous drugs, such as fentanyl, which cause the death of more than 100,000 Americans per year; cartels are already present in almost all states of the American Union, allying themselves with local gangs, generating even more violence and insecurity in the cities.

In economic terms, cheap labor and very lax environmental and labor regulations, added to the free trade agreement between both countries, have caused thousands of manufacturing companies from the United States to establish themselves in Mexico, leaving many states of the American Union deindustrialized; and the trade agreement has generated a huge trade deficit with Mexico, which affects the finances of the United States.

Thus, for Trump, his close circle, and his social base, Mexico is practically the main threat to the United States in terms of security and economic matters.

Hence, the only way to stop and reverse these negative consequences for the United States is to punish the Mexican government where it hurts the most, that is, in the economic aspect, not only so that Mexico remains the main barrier, the true wall that stops illegal migration to the United States, but also to stop the flow of drugs to the United States, because the Trump government is very aware that it does not have the capacity and perhaps not even the will to reduce the insatiable consumption of drugs in its country, so it passes the responsibility of reducing this problem to its southern neighbor.

The other reason is that the Trump government wants to form a homogeneous front against the China-Russia duo. That is, countries that consider themselves allies of Washington, such as Mexico and Canada, must strictly follow Washington's guidelines in the global strategic competition that is mainly with China.

The Mexican government has a trade deficit with China of 120 billion dollars, that is, practically half of the trade surplus that Mexico has with the United States ends up in Chinese pockets. This is because a large part of the supply chain begins in China and/or Southeast Asia, continues their journey to Mexico, where the products are manufactured or partially or fully assembled, and finally arrives, without tariffs (thanks to the USMCA), in the United States.

The Trump administration no longer wants China to be the one that ends up benefiting from the USMCA, nor does it want Chinese investments to compete with the United States in the Mexican market, so the tariffs are an announcement to Mexico that it must cut economic relations with China, something that seems impossible given that the supply chains would be seriously disrupted; unless said chains start in Mexico, that is, the factories that provide many of the inputs are relocated to Mexico (nearshoring).

The latter is precisely what the Mexican government proposes, but the Trump administration not only wants those factories to leave China and cross the Pacific, but to be established in the United States; and, similarly, that American factories that are in Mexico be relocated to the United States.

The latter would put an end to any free trade agreement between Mexico and the United States, and to Mexico's attractiveness as a platform for exporting to the United States.

Thus, Trump is demanding the impossible from Mexico: that it stop the flow of migrants from all over the world and accept all deportees, of all nationalities, that the United States sends to it; that it stop all drug flows to the United States (knowing that the Mexican government is in collusion with the cartels, which would force it to cut those ties, something that the Mexican political class is not willing to do); that it cut its economic ties with China, but at the same time that the American, European and Asian companies that take advantage of the USMCA to export from Mexico to the United States without tariffs, relocate to the United States, which would leave Mexico without any attraction for foreign investment.

In short, Sheinbaum is between a rock and a hard place, and there is no way she can come out unscathed, since if the trade war continues for several months, it is estimated that Mexico would lose 2% of its GDP this year, when it was estimated that it would grow by just 1%, meaning it would end 2025 with a decrease of -1%.

Finally, the United States can withstand a trade war against Mexico and Canada for longer but adding China and perhaps later the European Union (which Trump has also threatened with tariffs) could be catastrophic for the American economy.