President Donald Trump has been going country by country attacking the trade agreements and working to unmake them. In the absence of those deals, costs are going up for companies, which are being passed along to consumers. Monday is the deadline for the deal with Mexico to be made, but the negotiations aren’t going well.
Bloomberg reported that the U.S. is being forced to reconsider the deadline since the Mexican negotiators don’t agree to Trump’s terms. One U.S. official said they’re still trying to negotiate a 5 percent tax.
“If the 5 percent tariff is triggered, but Mexico follows through on promises to crack down on migration, the duties could be short-lived,” Bloomberg paraphrased the official said.
Ironically, Bloomberg also reported that China’s experience is to hold out as long as possible.
For two-and-a-half years, Beijing has watched Trump draw a red line, only to be willing to cross it, erase it, push it back, or pretend he never drew the line, to begin with.
“After negotiations fell apart last month, Trump hiked tariffs on $200 billion of Chinese goods to 25 percent from 10 percent and stepped up moves to kneecap Chinese companies like Huawei Technologies Co.,” Bloomberg reported. China retaliated, and now those trade taxes are being pushed off onto Americans.
China’s experience can provide a path for Mexico: to hold out as long as they can.
“China can retaliate with blanket tariffs in a way that Mexico cannot because it would be shooting itself in the foot. We would be putting taxes on our own exports,” said Jorge Guajardo, Mexico’s former ambassador to China. “Mexico will have to be much more strategic in how they impose retaliatory tariffs than China.”
The two countries could also work out their own deal on the side, outside of the United States, and leave Trump standing alone at the negotiation table. Mexico could embark on a whole new industry of produce that could supply China the way the United States has as a more cost-effective solution.
One report suggests if Trump issues the 5 percent tax on Mexico, Americans could lose 400,000 jobs.