Crisis deepens as Trump floats 20 percent tax on Mexico goods to pay for wall

[webfact]

Crisis deepens as Trump floats 20 percent tax on Mexico goods to pay for wall

By Steve Holland and Miguel Gutierrez

 

A worker stands next to a newly built section of the U.S.-Mexico border fence at Sunland Park, U.S. opposite the Mexican border city of Ciudad Juarez, Mexico. REUTERS/Jose Luis Gonzalez

 

PHILADELPHIA/MEXICO CITY (Reuters) - U.S. President Donald Trump could pay for a wall on the southern border with a new 20 percent tax on goods from Mexico, the White House said on Thursday, deepening a crisis after plans for a summit with the Mexican president fell apart.

 

Trump wants the measure to be part of a broader tax overhaul package that the U.S. Congress is contemplating, White House spokesman Sean Spicer told reporters on Thursday.

 

It was not immediately clear how the tax would work. Parts of the proposal that Spicer described resemble an existing idea, known as a border adjustment tax, being considered by the Republican-led U.S. House of Representatives.

 

Spicer said: "We have a new tax at $50 billion at 20 percent of imports -which is, by the way, a practice that 160 other countries do right now."

 

"Our country's policy is to tax exports and let imports flow freely in, which is ridiculous. But by doing it that way we can do $10 billion a year and easily pay for the wall. Just through that mechanism alone," Spicer told reporters travelling with Trump to Philadelphia.

 

The White House later on Thursday said it was not endorsing the border adjustment tax. No further details were available.

 

News of the tax proposal widens a rift with Mexico which earlier on Thursday scrapped a planned summit between President Enrique Pena Nieto and Trump over the Republican's demands that Mexico pay for the border wall to stem illegal immigration.

 

Pena Nieto wrote on Twitter that he was pulling out of the planned meeting with Trump in Washington next week.

 

He was responding to an earlier tweet from Trump who said it would be better for the Mexican leader not to come if Mexico would not pay for the wall.

 

Trump later presented the scrapped plan as a mutual agreement.

 

Addressing Republican members of Congress at a meeting in Philadelphia, he said he and Pena Nieto had agreed to cancel the meeting, adding it would be fruitless if Mexico did not treat the United States "fairly".

 

"I've said many times that the American people will not pay for the wall," Trump told the gathering. "Unless Mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless and I want to go a different route."

 

Trump views the wall, a major promise during his election campaign, as part of a package of measures to curb illegal immigration. Mexico has long insisted it will not heed Trump's demands to pay for the construction project.

 

Trump, who took office last week, signed an executive order for construction of the wall on Wednesday, just as a Mexican delegation led by Foreign Minister Luis Videgaray arrived at the White House for talks with Trump aides aimed at healing ties.

 

The timing of that, and Trump's reiterated call for Mexico to foot the bill, caused outrage in Mexico, with prominent politicians and many on social media seeing at as a deliberate snub to the government's efforts to engage with Trump, who has for months used Mexico as a political punching bag.

 

UNDER PRESSURE

 

Pena Nieto was under pressure to cancel the summit.

 

"We have informed the White House that I will not attend the working meeting planned for next Tuesday with @POTUS," he tweeted on Thursday. "Mexico reiterates its willingness to work with the United States to reach agreements that favour both nations."

 

Relations have been frayed since Trump launched his campaign in 2015, characterizing Mexican immigrants as murderers and rapists.

 

Trump has vowed to renegotiate the North American Free Trade Agreement and slap high tariffs on American companies that have moved jobs south of the border.

 

Mexico ships 80 percent of its exports to the United States, and around half of Mexico’s foreign direct investment has come from its northern neighbour over the last two decades.

 

"The U.S. has a 60 billion dollar trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers... of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting," Trump said in his tweet before the planned Pena Nieto talks were scrapped.

 

The United States runs a $58.8 billion trade deficit with Mexico, according to the latest U.S. government figures. But Mexico is also the United States' second-largest export market.

 

Former foreign minister Jorge Castaneda said the Mexican government should have cancelled the summit earlier in the week, when it became clear that Trump was going to go ahead with measures to build the wall and clamp down on immigration.

 

"There is an atmosphere of crisis in the United States and it is going to last a long time. We are going to have to get used to living like this," he said on Mexican radio.

 

(Additional reporting by Roberta Rampton in Washington and Frank Jack Daniel, Dave Graham and Christine Murray in Mexico City; Editing by Alistair Bell)

 

-- © Copyright Reuters 2017-01-27

[ezzra]

The man has balls o f steel, " huevos grandes" in Spanish, not afraid to slaughter

few holly cows that past administrations would touch not wanting to

' upset ' or rock the boat.....

[nakhonandy]

He said Mexico would pay for the wall.

 

A 20% import tax means US consumers pay, not Mexico!

[thaibeachlovers]

2 minutes ago, nakhonandy said:

He said Mexico would pay for the wall.

 

A 20% import tax means US consumers pay, not Mexico!

Then perhaps they'll start supporting US companies making stuff in the US.

Good job Donald!

 

And, the snowflakes were all saying that Mexico wouldn't pay for the wall .

[thaibeachlovers]

Mexico ships 80 percent of its exports to the United States, and around half of Mexico’s foreign direct investment has come from its northern neighbour over the last two decades.

 

Be scared Mexico, be very scared. You have been ripping off the US long enough, now it's over.

 

Perhaps if the Mexican government had taken steps to stop the flow of drugs and illegals over the border before, this wouldn't be happening.

 

PS. If I were an American, I wouldn't be planning any holidays in Mexico any time soon- sure to be a backlash.

[Peterw42]

What happens when Mexico puts a 20% tax on US imports? (To help fund a new tunnel, lol)

[JHolmesJr]

10 minutes ago, nakhonandy said:

He said Mexico would pay for the wall.

 

A 20% import tax means US consumers pay, not Mexico!

 

You thought they were just going to say ok and write him a cheque.

 

Another free idea for donald: track down all bank accounts of the mexican cartels and all their shell companies, freeze those accounts confiscate the funds and pour them into the wall.

[thaibeachlovers]

2 minutes ago, Peterw42 said:

What happens when Mexico puts a 20% tax on US imports? (To help fund a new tunnel, lol)

They have more to lose in a trade war than the US does.

[Silurian]

8 minutes ago, thaibeachlovers said:

Then perhaps they'll start supporting US companies making stuff in the US.

Good job Donald!

 

And, the snowflakes were all saying that Mexico wouldn't pay for the wall .

 

And all those parts that are made in Mexico and then assembled in the USA will also be taxed. All the base resources used by US companies that are brought in from Mexico will be taxed. Do you think US companies will just absorb this cost? Nope, the cost will be passed along to the US citizen. In the end, the US citizen will pay for the wall, plain and simple.

 

[WaywardWind]

10 minutes ago, thaibeachlovers said:

Then perhaps they'll start supporting US companies making stuff in the US.

Good job Donald!

 

And, the snowflakes were all saying that Mexico wouldn't pay for the wall .

The average wage in Mexican factories is $2.00 per hour, so unless workers in America are willing to receive the same wages, the price of consumer goods is going to rise dramatically. Even paying factory workers in the US the federal minimum wage of $7.25 per hour, (plus mandatory benefits), the prices would skyrocket.

 

How's that working out for you?

[thaibeachlovers]

4 minutes ago, Silurian said:

 

And all those parts that are made in Mexico and then assembled in the USA will also be taxed. All the base resources used by US companies that are brought in from Mexico will be taxed. Do you think US companies will just absorb this cost? Nope, the cost will be passed along to the US citizen. In the end, the US citizen will pay for the wall, plain and simple.

 

You may be right, but the concept that people can't expect to export jobs to countries that exploit workers to get stuff cheaper without consequences like increased unemployment and social deprivation is too big to deal with here.

[thaibeachlovers]

6 minutes ago, WaywardWind said:

The average wage in Mexican factories is $2.00 per hour, so unless workers in America are willing to receive the same wages, the price of consumer goods is going to rise dramatically. Even paying factory workers in the US the federal minimum wage of $7.25 per hour, (plus mandatory benefits), the prices would skyrocket.

 

How's that working out for you?

Perhaps that would be better for the country, with less unemployment etc.

However, it makes no difference. Within a few years factories will be returning to the US to produce stuff by robotics and AI. Guess what, they won't be paying workers anything, as there will be no workers. 

How is that going to work out for you?

[WaywardWind]

1 minute ago, thaibeachlovers said:

Perhaps that would be better for the country, with less unemployment etc.

However, it makes no difference. Within a few years factories will be returning to the US to produce stuff by robotics and AI. Guess what, they won't be paying workers anything, as there will be no workers. 

How is that going to work out for you?

Two points.

 

The unemployment rate won't change because Americans won't work for those wages, so the wage offers will go up, and so will prices.

 

Second, I don't recall Trump campaigning on the promise to bring back jobs for robots. What you say is likely correct and Trump would know it, but it simply highlights one more time where Trump conned his supporters.

[ubonjoe]

A post that was a personal attack on a member has been removed. Please keep the discussion civil.

[Pib]

From looking a numerous news service Donald's 20% import tax on Mexico is going over like a led balloon with both Democrats and Republicans in Congress and Donald's mouthpieces are already walking-back the proposal.

 

An import tax on products made in China will be another led balloon if Donald  tries to carry through on a big scale.  But he'll probably still raise the import tax on a "few" items from various countries just so he can claim he followed through with the campaign promise.  

 

All administration have increased import taxes on some items like when it can be proven a country is dumping its product below cost into another country.  But the number of import tax increases it will be on such a small scale it will not affect consumer prices (nor create any significant amount of American jobs)....but it will partially satisfy Donald's support base and Donald can then make it sound like has made such  great deal which will bring back zillions of American jobs.

 

Raising import taxes on a large scale does nothing but hurt the American consumer.   The level of import taxes and what is taxed needs to be carefully thought-out with as much agreement as possible.

 

[mercman24]

happened in the UK years ago, the company i worked for, trained Polish workers (insert WE) and then moved to POLAND making 150 of my workmates redundant, i saw this coming and had moved on by then, but most ot them never worked again

[craigt3365]

41 minutes ago, thaibeachlovers said:

Then perhaps they'll start supporting US companies making stuff in the US.

Good job Donald!

 

And, the snowflakes were all saying that Mexico wouldn't pay for the wall .

Let's teach some basic economics here.  If goods and services cost more money, consumers will have less to spend.  Resulting in FEWER jobs in the US.  Sadly, many don't understand this concept.  As well as the concept that Mexico will NOT pay for the wall.  US consumers will as they costs will just be passed along.  Great job Donald!

 

Enough with the snowflake references...

 

A great article to understand the impacts of tariffs:

http://www.nationalreview.com/article/432462/donald-trump-protectionist-tariffs-hurt-working-class

 

Quote

 

The Problem with Trump’s Protectionist Tariffs

 

Luckily, we don’t have to guess how such a tariff would impact the economy, because the Obama administration attempted a version of Trump’s idea seven years ago. It did not go well.

 

“It’s basically a real-world case study on what would happen if we imposed 35 percent tariffs on Chinese imports,” says Scott Lincicome, an international trade attorney and adjunct fellow at the Cato Institute. “In this case, we saw huge costs for consumers, gains by other foreign competitors, and almost no gains for American workers, even under the most generous of assumptions.”

 

 

http://www.economicshelp.org/blog/glossary/tariffs/
 

 

[thaibeachlovers]

10 minutes ago, WaywardWind said:

Two points.

 

The unemployment rate won't change because Americans won't work for those wages, so the wage offers will go up, and so will prices.

 

Second, I don't recall Trump campaigning on the promise to bring back jobs for robots. What you say is likely correct and Trump would know it, but it simply highlights one more time where Trump conned his supporters.

No, Trump didn't campaign on jobs for robots, but no politician is willing to go there, so I don't blame him on that one.

How well would he have done saying "I'd like to help the workers, but within my lifetime most will be replaced by robots and you will all be unemployed"?

Robotics and AI will be able to do almost any manual job, including maintaining themselves, and the middle class is also doomed, but no one in government is talking about it- wonder why? Meanwhile, petrol pumps are automated, parking building cashiers have been replaced by machines, self service machines in supermarkets threaten every cashier, even ticket machines in cinemas are already replacing ticket sellers ( in Thailand, the once upon a time ticket sellers just show customers how to use the machines now ) etc etc etc. It's all happening by stealth. People need to wake up and start demanding answers from politicians.

 

[craigt3365]

4 minutes ago, mercman24 said:

happened in the UK years ago, the company i worked for, trained Polish workers (insert WE) and then moved to POLAND making 150 of my workmates redundant, i saw this coming and had moved on by then, but most ot them never worked again

In one of my first economics classes, we studied the buggy whip.  Very popular and in demand years ago, but eventually, all manufacturers went out of business.  The net?  Be prepared, as you were.  Recognize where the market is going.  Sadly, many do get caught in this trap with few skills to provide other than making "buggy whips".  No easy answers here, and for sure not what Trump's proposing.  It's madness.  But, caters to a certain part of the population.

 

 

 

[55Jay]

Tax imports.  Exempt taxes for exports. Lower tax rate for businesses in the US. 

 

Sounds fairly straight forward.  But it's just one aspect of broader (R) tax reforms, and gets mired down further with unintended consequences with other countries, WTO regs, and the "VAT" elephant in the room.  

Quote

Notwithstanding all the happy talk about Congress passing a tax reform bill in 100 days next year, any effort to rework the revenue code will require Congress and the Trump Administration to unravel an exceedingly tangled ball of string. And perhaps no problem is more knotty, and more politically explosive, than how the U.S. tax code treats international trade.

http://www.forbes.com/sites/beltway/2016/12/08/border-adjustability-is-already-fueling-tax-reform-controversy/#3ad1c2cf42bb

I go back to Kelly Anne Conway characterizing Trump as a "transactional leader".  And that's fine if you are managing your own business for decades, and have a deep understanding of how everything works.  The aperture is wide open now, must be like a ton of bricks falling on his head.  But I give him credit for tossing turds into the proverbial punch bowl and seeing what floats.

Edited January 27, 2017 by 55Jay

[Jack Mountain]

Why not a big giant wall around whole america? Nobody in and specially nobody out!

[55Jay]

^ Not a bad idea.  Pause, find out "what the hell is going on".  A giant Reset Button! 

 

[Stocky]

Well if he does impose the tax and build the wall and the Mexican factories close, then there's going to be a hell of a lot of unemployed Mexicans looking for ways around it, over it, or under it.

[Pib]

34 minutes ago, Jack Mountain said:

Why not a big giant wall around whole america? Nobody in and specially nobody out!

Please don't give Donald any ideas.  Someone will tell him that wall would be longer than the Great Wall of China and he would then feel it's  a must to built the Great Wall of Trump America.   Ego R Donald.

[dcutman]

3 hours ago, craigt3365 said:

Let's teach some basic economics here.  If goods and services cost more money, consumers will have less to spend.  Resulting in FEWER jobs in the US.  Sadly, many don't understand this concept.  As well as the concept that Mexico will NOT pay for the wall.  US consumers will as they costs will just be passed along.  Great job Donald!

 

Enough with the snowflake references...

 

A great article to understand the impacts of tariffs:

http://www.nationalreview.com/article/432462/donald-trump-protectionist-tariffs-hurt-working-class

 

 

http://www.economicshelp.org/blog/glossary/tariffs/
 

 

The US could just impose a $25 departure tax on all international flight travel, and $10 to $25 depending on commercial or private vehicles crossing into Mexico or Canada, as well as a remittance tax for Mexicans.

That would cover the cost of the wall and the entire budget for homeland security in one swoop.

<deleted>

 

Edited January 27, 2017 by ubonjoe
Inflammatory comment removed

[craigt3365]

15 minutes ago, dcutman said:

The US could just impose a $25 departure tax on all international flight travel, and $10 to $25 depending on commercial or private vehicles crossing into Mexico or Canada, as well as a remittance tax for Mexicans.

That would cover the cost of the wall and the entire budget for homeland security in one swoop.

So all you snowflakes with crystal balls and predicting failure, the possibilities for revenue are there.

 

I didn't predict failure.  I showed an example of where this HAS failed in the past.   No crystal ball needed.

[Pib]

How about a Bt200

17 minutes ago, dcutman said:

The US could just impose a $25 departure tax on all international flight travel, and $10 to $25 depending on commercial or private vehicles crossing into Mexico or Canada, as well as a remittance tax for Mexicans.

That would cover the cost of the wall and the entire budget for homeland security in one swoop.

So all you snowflakes with crystal balls and predicting failure, the possibilities for revenue are there.

 

So, Americans crossing into Mexico and Canada would foot the bill.

 

And yes, let's put special fees on Mexicans in America....kinda like how Thailand puts special fees on farangs like much higher park fees, ATM foreign card fees, etc.  Sounds like the nationalist thing to do.

[thaibeachlovers]

5 minutes ago, craigt3365 said:

I didn't predict failure.  I showed an example of where this HAS failed in the past.   No crystal ball needed.

Everyone ( myself included ) predicted Trump would lose. He didn't. Past examples have no validity with Trump.

[FritsSikkink]

2 hours ago, ezzra said:

The man has balls o f steel, " huevos grandes" in Spanish, not afraid to slaughter

few holly cows that past administrations would touch not wanting to

' upset ' or rock the boat.....

If you tax Mexican goods, the Americans will pay more for these goods, not the Mexicans. They probably sell less but you still pay for the wall yourself.

 

[FritsSikkink]

2 hours ago, thaibeachlovers said:

Then perhaps they'll start supporting US companies making stuff in the US.

Good job Donald!

 

And, the snowflakes were all saying that Mexico wouldn't pay for the wall .

Make stuff in the USA, it will be much more expensive which most Americans can't afford.

Mexico isn't paying, the US customer is.