​What is Trump thinking with all this back-and-forthing on tariffs? Is it really linked to fentanyl labs and immigrants? Is there a hidden agenda?  The idea of Trump “thinking,” rather than just blustering and bullying, may be a bit of a stretch. But let’s try to figure some things out.

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Trump has, of course, threatened 25% tariffs on imports from Mexico and Canada. As he often does, he claimed victory whenMexico moved some troops toward the border, which they were always planning to do. So the tariffs are on pause. Trump backed off.

 

Trump’s justifications for higher tariffs wander all over the place. Besides using them to supposedly stop the flow of drugsand migrants, he claims countries are selling us too much stuff, stuff that could be made in the US.

 

The US does have a trade deficit with Mexico, which has resulted from the signing of the North American Free TradeAgreement in 1994. This allowed US corporations, ever in search of cheaper resources, less regulation, and cheaper labor in particular, to produce in Mexico and export back to the US with minimal tariffs. We know the effects of NAFTA on jobs in US manufacturing towns.

 

What is perhaps less discussed are the effects in Mexico. US agri corporations, subsidized by the US government, dumped tons of corn and wheat into Mexican markets at prices 15% to 30% below the cost of production. This drives down prices and drives millions of small Mexican farmers into poverty and off their land. Mexico now imports 40% of its grain, whereas before NAFTA it was 7%.

 

Folks went north, to the maquiladoras, low-wage component and parts factories supplying US corporations. Or across theborder.

 

Sin Maiz No Hay Paiz

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Trade and trade rules  reflect  relative economic and military power. NAFTA and the World Trade Organization (WTO) are agreements that privilege the free movement of goods and capital and profit. Under existing trade rules, workers and small farmers lose.

 

For the last three decades, the global 1% captured over half of all increases in income. That’s not only because of trade, ofcourse, but trade played a part. Neoliberalism and its promise of “all boats rising” has failed.

 

The WTO has a “trade court” that interprets trade rules. Over the last several years, Mexico, under President Lopez Obradorand now Claudia Sheinbaum, has adopted policies to support Mexican farmers, and move to healthier food. Corn is themain grain: “Without corn there is no country.”

 

Part of agricultural policy has been to restrict and eventually phase out the import of US genetically-engineered corn. GM corn in the US is grown with the chemical glyphosate, a known carcinogen. Any trade restriction, no matter how reasonable,according to WTO rules, is banned.

 

Mexico produced a brilliant synthesis of the evidence on the harms caused by glyphosate. They argued they have a right toprotect their people, their farm- ers, their indigenous food practices. The WTO trade court ruled for the US, and this was under the Biden administration. Might makes right.

 

Bringing Jobs Back?

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Trump claims to want to bring back jobs to the US and punish Mexico for the trade imbalance. But it is not about Mexico and the US. Workers here and in Mexico have similar interests in not being thrown in competition with each other, and having wages driven down. Food producers (not Big Ag) and consumers in both countries need high quality standards and climate-sustain- ing production.

 

Does Trump really think 25% tariffs will bring manufacturers back to the US? Does he care? Car manufacturers bring parts and components across the border several times per car in their supply chain strategies. Are they willing to refashion supply chains? Mainly what Trump is doing is introducing a whole lot of uncertainty into corporate decision making.

 

Would some strategic tariffs and an industrial policy that fostered research and development and targeted loans to clean energy firms, and training for skilled workers make sense? Absolutely. But if you think that’s the path Trump is on, I have a bridge I could sell you.

 

Trump’s tariffs and threats of tariffs are going to cause problems. They are a tax, so they will raise prices. Costs will go up, so firms might respond by cutting jobs. Trading partners will retaliate with their own tariffs. If prices rise, the Fed will keep interest rates high. As usual, all that hurts working families.

 

So, what is Trump going on about? Part of it is a show of dominance, playing to his base. But perhaps the main point? Republicans want more tax cuts for the wealthy, and they are going to have to find some ways to fund those cuts. Tariffs do raise some revenue, so that may be the point. The 1% need more.

 

Michael Righi is a retired economics professor and a member of the Retiree Advocate editorial board.