White House Secretary claims relationships with Mexico phenomenal

Just as a two-day meeting of Secretary of State, Rex Tillerson, and John Kelly Secretary of Homeland Security (DHS), with Pena Nieto Mexican president and other officials begins, the two countries disagree as to the quality of their relationship.

lodd Im

When White House press secretary Sean Spicer was asked about the meeting and the state of relations between the two countries he said:

“We have a very healthy and robust relationship with the Mexican government, and Mexican officials and I think they would echo that same sentiment. President Peña Nieto has echoed that at well. I think the relationship with Mexico is phenomenal right now, and I think there’s an unbelievable and robust dialogue between our two nations.”As in the quote, Spicer also thought that president Nieto would offer the same opinion. That seems highly unlikely.

Last month President Nieto abruptly cancelled a visit to Washington after disagreements about Mexico paying for the wall on the border that Trump has ordered built. As one article suggests perhaps the two leaders were backed into a corner: " Donald Trump by his promises in the campaign that he was going to build that wall and Mexico was going to pay for it, and Pena Nieto because his approval ratings are so terrible, that he has to play hardball politically. " Trump suggested later that the meeting was cancelled by mutual agreement. It was more like mutual disagreement!

On February 13th two separate demonstrations against Trump policies in Mexico City drew about 20,000 people as shown on the appended video. Mexican Foreign Minister Luis Videgaray claimed that Mexico would not accept unilateral immigration policies as Trump had been issuing:"I want to say clearly and emphatically that the government of Mexico and the Mexican people do not have to accept provisions that one government unilaterally wants to impose on the other. We will not accept it, because there's no reason why we should, and because it is not in the interests of Mexico."Videgaray was responding to the issuance by the DHS of two memos which give immigration authorities considerable power and latitude to deport undocumented immigrants. Many more could be deported back to Mexico. The memos are discussed in a recent Digital Journal(DJ) article and the arrival of US officals is discussed in another DJ article. Tillerson and Kelly will have done a phenomenal job if they are even able to bring Mexican US relationships back to normal.

Trump suggests a 20 percent tariff on goods from Mexico to pay for his wall

U.S. President Donald Trump has suggested that a 20 percent import tax could be used to pay for the wall he intends to build on the U.S. border with Mexico. However, there is already some confusion about whether the tariffs will ever be imposed.

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Earlier, Trump had said that if Mexico was not going to pay for the wall, there was no use of the two presidents meeting next week as scheduled. Nieto announced he would not go in a tweet. Later Trump said that the two had mutually agreed to call off the meeting. Trump appears determined to find some way of making Mexico pay and the twenty percent tariff on goods imported into the U.S. from Mexico would be one way.

It is not clear if Trump consulted anyone while making the suggestion. Trump appears to make threats, announcements, or even issue executive orders, without consulting others or considering the consequences. If Trump carried through with his threat, he could start a trade war with Mexico. Lindsey Graham, a Republican Senator tweeted: “Border security yes, tariffs no. Mexico is 3rd largest trading partner. Any tariff we can levy they can levy.” He also said that any proposal which would drive up the costs of Corona beer, tequila, or margaritas was a bad idea. Later, Reince Priebus, Trump's chief of staff claimed the 20 percent tariff was just one of a "buffet of options". Ordinarily the tariffs would need to be approved by Congress but the president does have the authority to impose tariffs on imports should he consider that U.S. interests are threatened. The New York Times speaks of the White House sowing confusing about the tariff plan.

The former president of Mexico Vicente Fox Queseda issued his own politically incorrect tweet in response to Trump's demand that Mexico pay for the wall referring to Trump White House Secretary Spicer : Sean Spicer, I've said this to @realDonaldTrump and now I'll tell you: Mexico is not going to pay for that fucking wall. #FuckingWall. Fox also warned Canada to watch out for "stupid" Trump.

Trump has estimated that the cost will be about $8 billion for the wall but many say this is too low. A 2016 report from investment research firm Bernstein suggested the cost would be between $15 to $25 billion. The cost was based upon a Government Accountability Office 2009 estimate that a mile of fencing along the border would cost between $2.8 million and $3.9 million to install but this was for the easiest stretches of land. Critics also are concerned that Trump may not have figured maintenance costs into his estimates.

Apparently Trump's team has had meetings with the Army and Interior Department to assess environmental obstacles to building the wall. The wall might threaten the movement of some species in the Rio Grande. The route also covers several flood plains where construction might face difficulties.

Trump withdraws US from Trans-Pacific Partnership trade deal

(January 22) The Trump administration announced it will withdraw from the 12-nation Trans-Pacific Partnership (TPP) trade deal and is committed to renegotiating the North American Free Trade Agreement (NAFTA).

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The announcement is in keeping with promises Trump made during his campaign for presidency. The announcement said that the withdrawal was meant to protect American jobs and that the U.S. would "crack down on those nations that violate trade agreements and harm American workers in the process". The statement said:

"For too long, Americans have been forced to accept trade deals that put the interests of insiders and the Washington elite over the hard-working men and women of this country. As a result, blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base..This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers."The TPP was signed in Auckland, New Zealand on February 4 2016 but only Japan has ratified it. Obama supported the TPP but was unable to get it ratified. Hillary Clinton at first praised it but then during the election campaign also opposed it along with Trump.

NAFTA was signed by the United States, Mexico, and Canada in 1994. The statement said that the U.S. would withdraw from NAFTA if the U.S. were not able to renegotiate it so as to give US workers a fair deal. U.S. stock markets have risen considerably since Trump was elected. No doubt corporations are looking for tax cuts, a stimulus program and less regulation. But not following through on the TPP and renegotiating NAFTA may send negative signals to markets.

China, notably absent from the TPP may begin to extend trade agreements with other countries in response and take a leadership role in expanding trading relationships. The TPP had been part of the Obama administration's "pivot" to Asia and meant to counter the influence of China. Damon Hunt, spokesperson for the Australian PM said that Trump could have a change of heart and the trade deal could proceed. Trump has been critical of Chinese trade policy and threatened to impose tariffs on Chinese imports. The Chinese have warned that China would retaliate if Trump begins a trade war.

Opening up NAFTA will result not only in demands for changes by Trump but no doubt by Canada and Mexico as well. According to the Council of Canadians only one in four Canadians even support NAFTA. The Council notes some of the negative features:For example, income inequality has worsened considerably in Canada, Mexico and the United States in the past 20 years. Manufacturing jobs have disappeared across the region, leading to a greater economic dependence in Canada on raw resource exports (and in Mexico on punishingly low wages).NAFTA is forged in the interests of global corporations many headquartered in the U.S. The last thing they want is opening up an agreement that was designed in their interests. It is too risky.

Trump plans steep tariff on Mexican car production

Trump has targeted Japanese car production in Mexico as well as that of U.S. auto makers in an attempt to bring production back to the United States.

Japanese automakers already produce far more vehicles in the U.S. than in Mexico. Mexico produces about 1.4 million vehicles annually compared to the US where the top three Japanese automakers already produced around four million vehicles in 2015. The large automakers Toyota and Honda produce less than ten percent of their output in Mexico while Nissan is most at risk as it produces a quarter of its vehicles in Mexico.

Trump has claimed that as well as renegotiating the North American Free Trade Agreement (NAFTA) between Mexico, the U.S., and Canada he would initiate a 35 percent tariff on cars exported from Mexico to the US. Even a 10 percent tariff would hit Nissan the worst with a 10.3 percent reduction in earnings. Mazda would lose 5.5 percent. Honda 2.2 percent and Toyota a mere 0.7 percent. None of the four companies have any immediate plans to change the location of their production.

However, analyst Chris Richter said: "As long as this administration is in place I suspect (Nissan is) not going consider any additional capacity there." Honda has already announced it will expand U.S. production of popular CR-V-SUV for the U.S. market. Toyota on the other hand is building a new plant in Mexico to produce the entry level Corollas sedan which is currently being produced at plants in Mississippi and Ontario. Demand for the vehicles has slumped as gasoline prices have dropped. However, Toyota president Akio Toyoda claimed: "We're always considering ways to increase production in the United States, regardless of the political situation."

Trump has also criticized U.S. companies such as GM and Ford Motor company for manufacturing outside the U.S. including Mexico but Nissan remains the company most at risk from Trump's policy. Nissan built its first Mexican plant fifty years ago and is now producing 800,000 cars there annually mostly the Versa and Sentra sedans. It exports roughly half of its production to the U.S.

Mexico is often thought of as attractive to auto-makers because of its low wages but there are other quite important factors. Mexico has agreements with 44 countries giving it access to fully half the global market tariff free. In contrast, the U.S. has similar deals with only 20 countries that only make up nine percent of global sales. Trump has complained about GM's Chevy Cruze hatchbacks produced in Mexico but most of the production goes overseas not to the U.S. They are more popular with buyers in South America and Europe than with Americans. The U.S. might gain more jobs simply by negotiating agreements with other countries such as Mexico has.

Kristen Dziczek, an analyst, says: "It’s pretty ironic that what makes Mexico successful is free trade. You can look at the new investment that has gone into Mexico and while a huge portion is for the U.S., they are selling a lot elsewhere, too." While auto makers do save hundreds of dollars on labor costs part of this saving is eaten up by other costs such as shipping so that as a result the saving per car is actually a small percentage of total cost. Hence, automakers often increase production in Mexico for reasons other than a lower labor cost. The companies save because of Mexican trade deals with Europe: ".. in total, an automaker saves more than $4,000 by building and shipping a car from Mexico to Europe instead of from the U.S. If Trump could match those trade deals, he would erase an average $2,500-per-vehicle cost advantage over American-made midsize cars."

The Ford Motor Company announced that it will not build a projected plant in Mexico. Trump tweeted: “Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning - much more to follow." Ford announce that it was canceling the $1.6 billion Mexican factory and instead investing $700 million in a Michigan plant.