How Donald Trump plans to pay for his wall on the US Mexico Border has been a huge (yuge) question throughout his campaign. He previously stated that he would negotiate with Mexico, and that they would simply pay for it. Not surprisingly, Mexico was not overly willing to do so.
Today, Trump introduced a plan to place a 20% tariff on all Mexican imports to the US. The math actually works as a 20% tax on $303 B, the amount of goods the US imported from Mexico in 2015, would yield more than enough money to pay for the wall.
While this may appear to solve the problem, Americans may end up with the burden after all. These high tariffs would cause many prices to rise, as many companies have their goods assembled and processed in Mexico. Ford, GM, Walmart, and Best Buy would likely be affected. It will be very interesting to see how everything unfolds.
http://money.cnn.com/2017/01/26/news/economy/trump-mexico-tariff/index.html
8 comments:
By imposing 20% tariff on importing goods from Mexico, U.S. and Mexico will both have to deal with the negative impact it brings to their economies. Trump made the big promise to his supporters that he would build a wall, and it would greatly upset his supporters if it doesn't end up happening. However, Mexico already made it loud and clear that they would not pay for the wall at all. Based on what we know, who do you think will end up backing down, U.S. or Mexico?
this was a very interesting article and i am excited to see if the wall even begins to be built. another thing that we have to look at is how we are going to fiance it because it was already stated that mexico is not going to pay a dime for it even though trump says he is going to make them pay. i feel that with the financial debt we are in as a country should also not bare the expense of the project.
Trump has already signed the executive action to begin working on the wall, however, the U.S does not have the proper funding to begin on such project. By imposing a 20% tariff on imported goods from Mexico is only going to affect our economy even more. The U.S is known for importing goods from other countries in which Mexico is one of them. This means that products imported from Mexico will be more expensive since the distributors will be paying this tariff. They will need to recuperate the money they paid to import the goods.
It will be interesting to see how US business' with plants based in Mexico will be treated in the coming years. I read an article earlier from TIME and it stated that Mexicans have launched boycotts of U.S. companies in response to Trump's actions. Some activists also took to social media and created hashtags such as "#AdiosStarbucks". The article also discussed a potential trade war with Mexico and the potential for pushing them into a recession.
Time Article Link:
http://time.com/4651464/mexico-donald-trump-boycott-protests/
A huge portion of these imports come from production for American companies. The tariffs seem to affect American companies and consumers more than anyone else. It will be interesting to see how the American public views these tariffs as time goes on.
I hope that there is a plan for the companies that are importing from Mexico to the U.S. to match the tax that are going to be imposed on the goods for American consumers. It is interesting that the plan to create jobs for American soil, could also negatively affect American industries such as the ones mentioned in the article. It will be interesting to see how this policy and following policies will pan out in the future under our new presidency.
This is a classic case of the importance of economics in political policies. Facially, this seems like an excellent plan; it effectively makes Mexico pay for the wall and leaves US tax payers out of it. Economically, however, we know all too well the side effects tariffs create: higher prices, lower levels of efficiency, etc. Its time to start vetting these policies through the scope of practical economics, otherwise we will be left with unhappy citizens feeling the financial burdens of a present with big ideas with little planned for how to achieve his goals.
I will be surprised if Mexico does not bring this to the World Trade Organization and put an equal tariff on U.S. goods entering Mexico. With this comes a breach of a treaty, (Trump has already planned to leave NAFTA anyway) but also a loss of reputation. If the United States is seen as a country that will easily take back its word, it is unlikely countries in the future will trust the U.S. Further, these tariffs affect Japan and South Korea, who build and sell in Mexico, and could lead to additional problems with our biggest trading partners.
Post a Comment