Trump Vows Mexico Tariffs: Who would they Hit, and Why?

President Donald Trump tweeted yesterday that, beginning on June 10, the United States would impose a 5 percent tariff on all goods entering the US from Mexico "until such time as illegal migrants coming through Mexico, and into our Country, STOP." He added that the tariff rate would steadily rise "until the illegal immigration problem is remedied."

A few thoughts:

This will affect lots of things that Americans buy: Mexico recently became the US' largest trade partner (in part because of the US-China trade spat). If these tariffs move forward, Americans looking to buy cars, electronics, and the makings of a fresh salad will pay more. Note: tomato-lovers and avocados-aficionados are particularly exposed.

Mexico can retaliate, a bit. Mexico's economy is much smaller than its northern neighbor's, so it has less leverage. But it can still target American exporters of meat, cheese, potatoes, cranberries, bourbon and speedboats (speedboats!) with retaliatory tariffs that could cripple their sales in Mexico, a major market. Mexico has done this once before, in response to Trump's metals tariffs last year.

The USMCA trade agreement, also known as NAFTA 2.0, is in serious jeopardy. The agreement has not been ratified in either the US or Mexico. US Democrats, led by House Speaker Nancy Pelosi, object to parts of the agreement and have delayed a vote. Trump appears to be preparing to force that vote anyway. If it comes, the treaty may well be rejected.

Will it work? Trump has made the fight against illegal immigration the heart of his political message since he first launched his presidential campaign. Turning the screws on Mexico over this issue plays well with his base as he heads into 2020. But a total "STOP" to undocumented migrant flows is virtually impossible, so what specifically does he want from Mexico now? Mexican President Andres Manuel Lopez Obrador has dispatched an envoy to Washington to find out.

Could it backfire? These tariffs would certainly hurt the Mexican economy far more than the US economy. But if Mexico's economy sinks, more people will want to leave Mexico, meaning more pressure at the US-Mexican border. And a crippled economy will leave the Mexican government with less money to address precisely the border problems that Trump says he wants solved.

Bottom line: The world is again reacting to a tweet, and Trump could just as easily reverse this plan. If not, these tariffs will have serious implications for Latin America's second-largest economy, for American consumers, and for US politics ahead of the presidential election.

Keep your eye on the timeline.

In Italy, stacks of plastic boxes in supermarkets and stores are not garbage - they are collected and reused, thanks to a consortium that specializes in recycling them for food storage. How do these "circular" plastic boxes help reduce energy consumption and carbon dioxide emissions?

Learn more in this episode of Eni's Energy SUPERFACTS series.

Over the past few years, we've seen three major emerging powers take bold action to right what they say are historical wrongs.

First came Crimea. When the Kremlin decided in 2014 that Western powers were working against Russian interests in Ukraine, President Vladimir Putin ordered Russian troops to seize the Crimean Peninsula, which was then part of Ukraine. Moscow claimed that Crimea and its ethnic Russian majority had been part of the Russian Empire for centuries until a shameful deal in 1954 made Crimea part of the Ukrainian Soviet Republic. Americans and Europeans imposed sanctions on Russia. But Ukraine is not part of NATO or the EU, and no further action was taken.

More Show less

British economist Jim O'Neill says the global economy can bounce back right to where it was before, in a V-shaped recovery. But his argument is based on a lot of "ifs," plus comparisons to the 2008 recession and conditions in China and South Korea that may not truly apply. Ian Bremmer and Eurasia Group's Robert Kahn take issue with O'Neill's op-ed, on this edition of The Red Pen.

Today, we're taking our Red Pen to an article titled "A V-Shaped Recovery Could Still Happen." I'm not buying it. It's published recently by Project Syndicate, authored by British economist named Jim O'Neill. Jim O'Neill is very well known. He was chairman of Goldman Sachs Asset Management. He's the guy that coined the acronym BRICS, Brazil, Russia, India, China. So, no slouch. But as you know, we don't agree with everything out there. And this is the case. Brought to you by the letter V. We're taking sharp issue with the idea that recovery from all the economic devastation created by the coronavirus pandemic is going to happen quickly. That after the sharp drop that the world has experienced, everything bounces back to where it was before. That's the V. Economists around the world are debating how quickly recovery will happen to be sure. But we're not buying the V. Here's why. W-H-Y.

More Show less

The United States and the European Union have comparable population sizes, but their COVID-19 death toll trajectories have recently become very different. Since the beginning of July, the average number of both new fatalities and new deaths per 1 million people is rapidly increasing in the US while it remains mostly flat in the EU. We compare this to the average number of new cases each seven days in both regions, where the US trend continues upward but is not surging like the death toll. EU countries' robust public health systems and citizens' willingness to wear masks and maintain social distance could explain the disparity.

"Neither America first, which is ultimately America alone, nor America the world's policeman," Sen. Chris Coons told Ian Bremmer in describing VP Joe Biden's approach to foreign policy should he win the presidential election in November. In the latest episode of GZERO World with Ian Bremmer, Sen. Coons provides details of how U.S. relationships with foreign governments and multilateral alliances could change in a Biden presidency. He also defended President Obama's track record, saying "I think it is a mischaracterization of the Obama-Biden foreign policy for President Trump to say that we were picking up the tab and fighting the world's wars and that we were disrespected." Coons stated that Biden would work to restore U.S. involvement in alliances like NATO, and shore up global support to pressure China on labor and environmental standards. The exchange is part of a broad conversation with the Senator about COVID response and economic relief, Russian interference in elections, and the 2020 presidential race. The episode begins airing nationally in the U.S. on Friday, July 10. Check local listings.