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What Trump’s tariffs on Mexico will do to red states

Escalating tariffs on Mexican goods are the equivalent of cutting off one's nose to spite one's face.

Undersecretary for North America for the Mexican Ministry of Foreign Affairs, Jesus Seade, Mexican Ambassador to the US Martha Barcena Coqui, Mexican Foreign Minister Marcelo Ebrard Casaubon and Mexico's Economy Secretary Graciela Marquez Colin attend a press conference with the Mexican delegation negotiating tariffs with US officials on June 3, 2019 at the Mexican embassy in Washington, D.C.. CREDIT: Photo by Eric Bardat/AFP/Getty Images.
Undersecretary for North America for the Mexican Ministry of Foreign Affairs, Jesus Seade, Mexican Ambassador to the US Martha Barcena Coqui, Mexican Foreign Minister Marcelo Ebrard Casaubon and Mexico's Economy Secretary Graciela Marquez Colin attend a press conference with the Mexican delegation negotiating tariffs with US officials on June 3, 2019 at the Mexican embassy in Washington, D.C.. CREDIT: Photo by Eric Bardat/AFP/Getty Images.

The June 10 deadline for President Donald Trump’s tariffs on Mexican goods is rapidly approaching, with the president demanding that the country stop the flow of Central American migrants to the U.S. border or else.

But lawmakers and business leaders in battleground and Republican states are against his decision to impose penalties on Mexican goods, stressing that doing so will harm their constituents.

Sen. Ted Cruz (R-TX) told CNN Wednesday that the tariffs will “have a very harmful impact.”

“Millions of jobs in Texas rely on international trade, and in particular, trade with Mexico. This is the wrong solution to the crisis,” he added.

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Cruz’s fellow Texan Republican, Sen. John Cornyn, told the New York Times, “We’re holding a gun to our own heads.”

Mexico is the top international trading partner for several U.S. states, including Texas, which is among the border states doing big business with the country. Arizona also gets roughly 37% of its imports from Mexico and exports around 30 percent to the country. Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, has come out against the tariffs, tweeting that his would be among the hardest hit states:

Mexico, of course, will be hit hard — exports to the United States account for over a third of Mexico’s gross domestic product — but it will likely pummel the U.S. economy, with red states being among the worst hit.

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The U.S. Department of Commerce calculated the annual cost of the president’s tariffs,  which will start at 5% and gradually increase to 25% on all Mexican goods by October.

Among the top 10 states hit hardest, seven are red states, and five (Michigan, Ohio, Arizona, North Carolina, and Florida) are battleground states.

Data calculated by the U.S. Department of Commerce shows the cost of tariffs imposed on Mexican goods to the overall economy as well as individual U.S. states, starting at 5 percent and going up to 25 percent, the maximum possible by October. CREDIT: U.S. Department of Commerce.
Data calculated by the U.S. Department of Commerce shows the cost of tariffs imposed on Mexican goods to the overall economy as well as individual U.S. states, starting at 5 percent and going up to 25 percent, the maximum possible by October. CREDIT: U.S. Department of Commerce.

 

 

 

 

 

 

 

Sen. Majority Leader Mitch McConell (R-KY) said Tuesday that there’s “not much support” for the Mexico tariffs among Republicans.

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Sen. Joni Ernst (R-IA) told reporters on Thursday that Republican senators “overwhelmingly” oppose these tariffs, adding that “tariffs cannot be the answer to everything.”

She is among a growing list of Republican lawmakers, which include Sen. Rob Portman (R-OH), and Martha McSally (R-AZ), who said they share the president’s frustration with the growing number of migrants coming to the U.S. border, but absolutely do not feel that tariffs will help.

“I share the president’s frustration with what’s going on at the border and I share his goal of stopping this insanity,” McSally said on Tuesday, during a telephone town hall.

“But you know what? Mexico is also Arizona’s No. 1 trading partner. We have over 200,000 jobs in Arizona that are dependent on this cross-border commerce,” she said, adding that the tariffs are “a tax on Arizona’s hardworking families.”

Not all Republican lawmakers from these key states oppose the tariffs, however. For instance, Sens. Marco Rubio (R-FL) and Rick Scott (R-FL) support them. Whether that position will hold in the event that a final trade deal is not reached remains to be seen.

Mexico’s importance as a trade partner is clear: This is why Trump could not simply rip up the North American Free Trade (NAFTA) deal without replacing it. The trilateral deal, which included Canada, is supposed to be replaced with a very similar deal, dubbed the USCMA.

But that deal is awaiting ratification by lawmakers in all three countries, and with the complication introduced by these tariffs, Congress is less likely to pass it before the August recess, a deadline issued by the Trump administration. Some lawmakers want tweaks made to the agreement before they vote, citing issues with enforcement.

Meanwhile, there’s a discussion among GOP lawmakers on either delaying the imposition of the tariffs or a vote to somehow block them, though a veto-proof majority seems unlikely. The president has already threatened lawmakers who try to stop his tariffs, warning Tuesday that they would be “foolish” to do so.

A wide range of goods will affected, including automotive vehicles (accounting for $93 billion in imports in 2018), electrical machinery ($64 billion), and agricultural imports ($26 billion), according to the U.S. Trade Representative’s office. Items like beer, avocados, and tomatoes are going to cost more.

But it’s not just imports and exports. There’s also a huge amount of parts and materials that go back and forth across the border — for instance, car parts can zigzag the border several times between plants in the United States and Mexico before they are installed in an American car. This means not just U.S. consumers, but also U.S. manufacturers will be paying a high price for these tariffs.

Christopher Wilson, deputy director of the Wilson Center’s Mexico Institute, told ThinkProgress that Mexico is “at the table and trying to find a solution. Mexico is engaging in dialogue.”

“Although I have to say that Mexico was already at the table, and already working with the United States and already responding to U.S. requests to help jointly solve this immigration challenge,” he added.

Mexican Foreign Minister Marcelo Ebrard said during a news conference at Mexico’s Embassy in Washington, D.C., on Tuesday that he thinks an agreement can be reached to avoid the tariffs.

Trump, though, is not so sure. Commenting on the talks between Mexican Deputy Foreign Minister Jesus Seade and a U.S. team that includes Vice President Mike Pence and U.S. Trade Representative Robert Lighthizer, the president tweeted that “not nearly enough” progress has been made in the talks:

Wilson said that if the United States presses Mexico too hard, there is a risk that Mexico simply won’t have the political space to work as closely with the United States. Mexican President Andres Manuel Lopez Obrador is facing pressure to stand up to Trump, he explained.

“The public opinion in Mexico is that people want him to take a hard line against the United States,” he added. Additionally, he said that in political circles, there’s a clear sense that what the United States is doing is damaging not only the Mexican economy but also the U.S. economy.

Trump’s threats, he explained, have put Mexico in a position where it is forced to respond to tariffs in a retaliatory manner, “because that’s the only obvious, clear, and fair tool to use to respond to these current set of threats.”

Alberto Ramos, chief economist for Latin America at Goldman Sachs, told the Wall Street Journal that the tariffs will deteriorate trade relations because “you’re basically using an international-trade-related instrument to pursue non-trade objectives like border security and immigration.” In other words, Mexico — or, really, any trading partner — is now on notice that trade agreements can be upturned over any policy issue.

Wilson said that both the United States and Mexico have been focusing on compartmentalizing issues for the past few decades, keeping migration, trade and security issues on their own respective tracks.

“We’ve been very careful not to let a dispute on one track contaminate the entire relationship … Explicitly linking, in a high-stakes way, trade and migration, is, therefore, very dangerous for the bilateral relationship, as a whole,” he added.