Trump's America

[Danny Bateman]

You still haven't explained why the wall is actually a good investment and not just a hare-brained campaign promise.

 

Or why shaking down an ally for something they don't want and plenty of Americans don't want is a good idea in the first place.

[Moiraine]

I'm semi-redacting what I said before. Just read that Mexico is our 3rd biggest trading partner. We're only 9 years removed from a recession. Do we want to be this stupid?

 

 

Also, let's say we act like a bunch of tools with Mexico, then we do the same thing about the UN, and the same thing with the Paris agreement. Is the rest of the world just gonna say "it's cool" ?

[mrandyk]

You still haven't explained why the wall is actually a good investment and not just a hare-brained campaign promise.

 

Or why shaking down an ally for something they don't want and plenty of Americans don't want is a good idea in the first place.

 

Not sure if that's a good example, given that in this episode of South Park the immigrants actually took jobs away from Americans.

[Moiraine]

Del

[GM_Tood]

You still haven't explained why the wall is actually a good investment and not just a hare-brained campaign promise.

 

Or why shaking down an ally for something they don't want and plenty of Americans don't want is a good idea in the first place.

Assuming this was directed to me.

 

1. Votes? Guaranteed re-election?

 

2. These import taxes are going to be across the board...not just on goods coming from Mexico. So we'd be shaking down all our allies and more. (edit: to level the playing field when it comes to global import taxation?}

[ColoNoCoHusker]

The USA can weather Mexico hating us. However, Mexico's exports can be sent elsewhere pretty easily. China has been trying for 20 years to improve its trade relationship with Mexico & Central America. I don't think Mexico's economy is nearly as dependent on the USA as many Americans would believe. Strategically, part of the Mexican Federal agenda since the 1930s has been diminishing reliance on the USA.

 

The US is heavily reliant on Mexican labor for agriculture. Most of our winter produce comes from Mexico or directly relies on Mexican labor. If we don't have that source of labor, we're either going without food or paying $5 for a head of iceberg lettuce.

 

EDIT: I also forgot that over the last few years, CEMEX has taken control of the USA aggregate & cement markets. Would love to see what happens when Mexico hikes the price of cement-based building materials to offset the tariffs. This could get interesting fast...

[Landlord]

So what I've learned tonight is that Donald Trump is a liar, deciding to build the wall has no real benefit to America(ns), and some of my favorite drinks are about to get more expensive.

[knapplc]

So all those winter fruits and vegetables we get from Mexico, about $21 billion worth in 2015, are going to come from where?

 

If I, the consumer, am not going to pay more for fresh produce, where is it going to come from?

[ZRod]

So all those winter fruits and vegetables we get from Mexico, about $21 billion worth in 2015, are going to come from where?

 

If I, the consumer, am not going to pay more for fresh produce, where is it going to come from?

Chile and Argentina are jubilant!

[BigRedBuster]

 

 

Let's say Trump slaps on a 20% export tax and the media and libcucks are like "American people paying for wall!"

 

Now Trump has his import tax (for manufacturing / jobs ect) and says "ok ya ya we'll tax all the remittance going to mexico!"

 

Libcucks says "omg this is just American money you are taxing omg!"

 

Now Trump has his import tax, and is taxing remittance, and says "ok ok ok, i'm going to triple the price of Visa's and charge 10 bucks for non-american border crossings!"

 

Libcucks say "BLAM!" cause they just ate a bullet.

 

I write it in a jokey way obviously. Maybe it will be a 5% import tax and a bunch of other things, but we're getting that wall and Mexico is going to pay for it in either cash, pain or both.

I have no clue what you just said.

 

Please speak English and explain how Mexico is going to pay for it.

 

Sure thing...no more humor from me tonight. Mexico's economy is entirely dependent on the United States. Mexico exports about $300 billion worth of goods to the United States each year. When you size up this amount against Mexico's total GDP of about $1.1 trillion, it becomes quite clear that without access to the United States market, Mexico's economy would fall to pieces. Now as you might have guessed, this is not a two way street. United States exports to Mexico totaled about $240 billion versus a $19 trillion GDP. Losing access to the Mexican markets would hurt the US but it's something we can take in stride if need be. As you can clearly see, the United States holds all the leverage in this relationship.

 

So the proposal floated today by White House Press Secretary was to impose a tariff on all imports from Mexico. Let's say 20% for the sake of simplicity. So Mexico, on its $300 billion in exports, would be paying the US government $60 billion in tariffs. Current estimates peg the cost of the wall around $10 billion, a drop in the bucket of the revenue raised by that tariff. One counterargument might be that Mexico would impose their own tariff. Well, considering the $60 billion trade deficit I previously mentioned, the United States government would still be walking away with $12 billion in net revenue. Also keep in mind that as I mentioned before, the United States holds all the leverage here. Mexico cannot aggressively pursue a trade war with the United States because it would devastate their economy. The terms of the agreement are essentially ours to dictate.

 

When imposing such a tariff you run the risk of passing on the cost of the tariff to the consumers. For example, instead of a $5 bottle of Corona staying $5 with $1 going towards the tariff and $4 to the merchant, that cost would hypothetically be baked in to become a $6 bottle of Corona. In this hypothetical, marketplace competition would determine whether Mexico is or isn't able to push the cost of the tariff back onto the consumer. For example, if a Mexican firm is selling a widget for $10 a Chinese firm is selling the same widget for $10.20, the Mexican firm has little to no room to increase the price of their product without losing its customer base to the competing firm. Its options will be to continue to sell the widget at $10 and absorb the cost of the tariff or to cease production of the widget. However, if there is no other firm that produces the widget, Mexico can likely get away with selling the widget at $12, though this potentially opens the market to new competitors.

 

So as you can see here, imposing an import tariff is a plausible way for the US to make Mexico pay for the border wall. However, you can make a reasonable argument that some of the cost of that tariff will be pushed back on to US consumers.

 

Your scenario here is pretty rosy with the tariff. Many of the imports from Mexico is food such as fresh produce. This typically is winter produce that does not have a place in the US to produce it during that season due to weather. Most of that production is not going to come back to the US because of a tariff and it's not going to go to China. It's simply going to get more expensive or become not available during those months.

 

OR, much of it is car parts. This production is easily transitioned to China. Typically, the production has been in Mexico because it's easier to work with a plant in Mexico than in China and ship it across the ocean. However, if the tariff goes up, these companies won't have a problem transitioning to China. If it's a little more expensive......once again, the American consumer is the one who pays.

 

Bottom line, Mexico is not going to pay for this wall. Americans will but it will be sold to them in a way that many will believe that Mexico is paying for it...but,...they won't be.

[BigRedBuster]

The rule of...."every action has an equal and opposite reaction is true many times in business and economics"

[BigRedBuster]

Sorry to repost this. But, I saw this headline again this morning and still can't believe this guy said this.

 

[knapplc]

I'm no economist and I don't run a business, so BRB, JJ, Tood, if you guys could educate me on how this works, I'd be happy to learn. Where do we get these wires from if not from Mexico? How long, realistically, does it take to stop production in Mexico and start it somewhere else?

 

 

[zoogs]

This is a curiously spirited "trade wars are awesome" argument. Let's see how shaking down shakes out.

[BigRedBuster]

I'm no economist and I don't run a business, so BRB, JJ, Tood, if you guys could educate me on how this works, I'd be happy to learn. Where do we get these wires from if not from Mexico? How long, realistically, does it take to stop production in Mexico and start it somewhere else?

 

 

It depends on if an American company makes the wires and owns the factory or not. If you are going to switch production from Mexico to either the US or China, that could take at least 6 months to a year....or more. Let me put it this way, this is probably fairly specialized equipment to make this wire. I use fairly specialized equipment too. (not the same industry) I purchased a piece of equipment for production back in December. It won't be delivered and installed till May. And...that was after researching the equipment for probably 6 months to make sure we were getting what we need. This stuff just isn't sitting on a shelf somewhere.

 

And, that is equipment going into an existing plant. Let's say they want to start producing that in Omaha. It's possible they would need to either build a plant or completely retrofit an existing building....which takes a long time.

 

Now, if they own the equipment and are going to move it, it could be a little faster. But, if Mexico is pissed off at us bad enough, they could make it extremely difficult to get that shipped and across the border.

 

What would probably happen in the mean time is I'm sure France's Airbus has a European or Asian supplier. It's possible they could make this type of wire and supply us even if it were a temporary fix till production is up and running in the US.