Donald Trump’s campaign promise to build a ‘great wall’ on southern border and make Mexico pay for it has already unraveled — less than a week since the reality TV star-turned-political power broker took office.
Trump has rolled back his campaign rhetoric about making Mexico pay for his wall, with the president admitting U.S. taxpayers will pay for it initially but claiming Mexico will pay the U.S. back for construction costs. The only problem is that Mexico has repeatedly refused to pay for the wall, and with turmoil already at a fever-pitch south of the border, Mexico’s government would risk all out revolution if it were to agree to any terms in which Mexicans were forced to pay for it.
But The Donald has a plan, and it seems pretty simple: Since Mexico won’t pay for the wall directly, he’ll just add a 20 percent tax on their imports at the border. “We can do $10 billion a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding,” White House press secretary Sean Spicer told reporters on Air Force One on Thursday.
That sounds pretty great, right? U.S. taxpayers will get a free wall by forcing Mexicans to pay for it by charging them to import the goods Americans consume from Mexico. Many food products that people living in the U.S. enjoy — like fruits, vegetables, and avocados — could be taxed an extra 20 percent under Trump’s plan. Mexican beer like Corona? 20 percent. Tequila, too. Cars, electronic equipment, machines, engines, pumps, oil, medical and technical equipment, furniture, lighting, signs, plastics, gems, precious metals, coins, iron, and steel products are Mexico’s top imports, which could be taxed 20 percent more.
But here’s what Trump and his short-sighted plan to pay for this wall won’t tell you: Mexico isn’t going to pay that tax — you are. By collecting an extra 20 percent in taxes at the border, Trump is about to charge you more for groceries at the supermarket. This will happen because Mexican exporters will have to raise their prices to account for the new tax, then that added cost will be passed on to the consumer. It happens every time a tariff is imposed. Not only that, but even non-imported goods go up in price because there is less competition in the market.
Imposing import taxes, or tariffs, is not a new policy. In fact, Barack Obama imposed a 35 percent tariff on Chinese tires from 2009-2012. As noted by the right-leaning National Review:
“Obama’s move could be credited with saving or creating $48 million of additional worker income and purchasing power.
“But the tariff also forced consumers to spend $1.1 billion more on tires than they otherwise would have — or roughly $900,000 per U.S. tire industry job created. And retaliatory tariffs imposed by the Chinese further hurt our economy. In early 2010, China’s Ministry of Commerce imposed tariffs ranging from 50.3 to 105.4 percent on American poultry imports, which ‘reduced exports by $1 billion as U.S. poultry firms experienced a 90 percent collapse in their exports of chicken parts to China.’”
Trump’s tough talk against Mexico is having other unintended consequences, as well. U.S. companies operating in Mexico, like Ford, McDonald’s, WalMart, and Costco, are now facing boycott threats inside Mexico in retaliation against Trump’s anti-Mexico rhetoric.
Mexico, like China did under Obama, will respond to America’s tariffs with some of their own, hurting U.S. businesses whose products are exported south of the border. The resulting trade war will only drive up consumer prices for working class Americans and Mexicans while increasing tensions between the neighboring countries to levels not seen in many, many years.