Trade war looms as U.S. President mulls tariffs to fund Mexico wall

open boundaries:Demonstrators take out a protest in Chicago on Thursday against President Donald Trump’s plan to build a wall along the U.S.-Mexico border.— PHOTO: AFP

open boundaries:Demonstrators take out a protest in Chicago on Thursday against President Donald Trump’s plan to build a wall along the U.S.-Mexico border.— PHOTO: AFP  

As President Donald Trump appears determined to implement his protectionist campaign promises, the U.S. could be headed for a trade war with partners. The White House said on Thursday that a 20% tariff on imports from southern neighbour Mexico is among the ideas under consideration to fund a border wall between the two countries.

Crossing swords

Pushing the borders of international diplomacy, Mr. Trump crossed swords with his Mexican counterpart on Twitter, in a first. Mexican President Enrique Pena Nieto announced the cancellation of his first meeting with Mr. Trump, which was scheduled for next week, on Twitter.

AFP later reported that Mexico said Mr. Nieto and Mr. Trump agreed to stop public statements about the wall. This came after reports that the two heads of state had a phone conversation amid the border wall row.

The wall and the tariff proposal have outraged Mexico, many U.S. leaders, including Republicans, but Mr. Trump is unfazed. “People want protection and a wall protects. All you have to do is ask Israel,” he said in a TV interview. The President had ordered earlier this week the “immediate construction of a physical wall on the southern border”.

The order was issued without any calculation of costs or timeline. The U.S.-Mexico border is 3,200 km long and nearly one-third of it has barriers of some sort. Mr. Trump has repeatedly said he would force Mexico to pay for the wall. Mexico has rejected the idea. After questions were raised, the White House initially said a 20% tariff on Mexican imports to the U.S. would fund the wall. It later clarified that a tariff was one of the several proposals on the table.

Cost of the wall

“Part of our goal today was to demonstrate that there is an easy way — or several ways,” press secretary Sean Spicer said. “Imports (are) one way. I just want to be clear that we’re not being prescriptive in saying that is the only way nor is the rate prescriptive,” he said, while chief of staff Reince Priebus said a “buffet of options” was available for the President.

Imports to the U.S. from Mexico in 2015 were valued at $316.4 billion.

What the White House is clear is that it would work with the Republican Congress on comprehensive tax reform legislation that will incentivise exports and dicentivise imports.

There could be resistance. “Border security yes, tariffs no. Mexico is 3rd largest trading partner. Any tariff we can levy they can levy. Huge barrier to econ growth. Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad,” Republican Senator Lindsay Graham tweeted. But such voices may be not be consequential as a large segment of the Democratic Party is set to support trade protection, even while opposing the wall. Senator Bernie Sanders — who is technically an independent — has supported Mr. Trump’s executive order that withdrew the U.S. from the Trans-Pacific Partnership trade treaty.

Media slammed

While a trade war is still only in the making, the White House war on media is on. Days after Mr. Trump said he has an “ongoing war with the media”, his key adviser Steve Bannon said the media should “keep its mouth shut.”

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