Resetting trade with Mexico sounds like a simple idea — and the leader of the world's most powerful economy can force action. The unintended consequences, however, are many.
Down is up, white is black, war is peace, ignorance is strength, lies are “fake news” — or utterances of the new President — and people choose their own “facts.” We are headed into an era without parallel in American history and I fear it will be very dark. Elections have consequences. Within hours, Donald Trump will have the nuclear codes.
Trump’s Commerce Secretary pick, Wilbur Ross, said Wednesday that “the first thing” he would address if confirmed is renegotiating NAFTA. As an old editor of mine would ask, “What does that mean?” As usual with Trump and his henchmen, the answer is opaque.
Progressives would love to see a renegotiation, which would focus on improving job security for American workers and pay for Mexican workers, as well as environmental issues and what they see as sweetheart deals for American investors. This is almost certainly not what Ross means.
I suppose many working-class whites in the Rust Belt voted for Trump because they felt victimized by NAFTA. The media keep telling me this, so it must be so. I imagine they will be disappointed, too. Will they enjoy paying the tariffs Trump threatens to impose on Mexican goods? Can they blame brown people when their jobs are automated — or lost because their company’s Mexican export market dried up thanks to Trump tariffs?
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Meanwhile, according to Reuters, billionaire investor Ross offshored more than 2,700 jobs himself. The billionaires in the new cabinet didn’t make their money by resisting globalization or supporting unions. Trump’s branded products are made in at least 12 low-wage nations. The Goldman Sachs and other Wall Street alums in the new administration aren’t going to cut back staff at their Hamptons houses so Goober and Lurline in the Heartland can get a buck-an-hour raise. One-offs such as the (largely misreported) Carrier “job save” are cons (“optics”), not serious policy.
Maybe only Nixon could go to China — the once fierce anti-communist had the domestic credibility that allowed him to lead U.S. rapprochement with the People’s Republic — but I don’t see any evolution in Ross’ thinking. As for Trump, the real power now, he thinks he thinks. He’s a developer con man and “reality television” star.
Within hours, he will be thrust into real reality. Mexico’s economy has already been battered by his wildly irresponsible rhetoric as president-elect. Canada is part of NAFTA, too. How will it fit? What about cross-border supply chains and the maquiladora system? Or the Mexican assets owned by American companies (such as the Kansas City Southern railroad)? These are parts of a complex, tightly interconnected system growing more so over more than 20 years. What about the effect on U.S. exports to Mexico and the employees that make them? And border-state economies, especially Texas, which has prospered with NAFTA. And what are the geostrategic risks of kicking Mexico in the teeth?
Has the Commerce Secretary-designate thought about this — or is it all a hustle to fool the rubes?
The damage is only beginning. And I have yet to see constructive proposals on NAFTA from the incoming administration. Slogans and resentment alone are not enough.
Today’s Econ Haiku:
I’ll miss No Drama
Dignity, wit, compassion
So, thanks Obama