Where have the Republican free traders gone?

Once upon a time, maybe three years go, in a galaxy called the United States of America, the Republican Party fervently supported open markets and trade like an article of faith. Assuming the partners played cleanly and according to agreed-upon rules—which I recognize is not always the case with customers like China—free trade was considered key to growing our own economy and those of other countries.

Yesterday we woke up to the news that President Trump was imposing punitive tariffs of five percent on all goods coming Mexico and which may, in relatively short order, escalate to 25 percent unless Mexico, our third-largest trade partner, does more to curb the transit of undocumented immigrants through its territory. There are no benchmarks or specific expectations, but just a broad threat.

I don’t follow international trade developments religiously, but it feels as if the Trump administration has started trade battles with practically every trade partner, big or small, friend or foe, following no discernibly coherent policy. The administration instead swings the club of punitive tariffs, like a drunk at a bar, hitting glasses, the booze and other customers, almost at random.

This latest brawl with Mexico seems to be a hissy fit by a president who ran on a promise to stop undocumented immigration and build a “big beautiful wall”, and hasn’t been able to deliver.

Influx of undocumented Mexican immigrants in fact had sharply decreased under the Obama and the first year of the Trump administrations, until it spiked during the past six months as a result of thousands of mostly Honduran refugees mobbing the southern border of the U.S. Indeed, the illegal immigration problem has grown worse under Trump.

Often you see these HIghland monsters on the expressways 
going north, in various stages of assembly—chassis or engines
coming south and finished units going north. 

Now it’s Mexico’s turn to get hit by Trump’s tariff club. He has repeatedly complained about the chronically unbalanced trade balance between the two countries, as if it were all part of a plot to “screw” the U.S.

But as any freshman student of economics will tell you, the trade imbalance—and the booming commerce between the two countries—is the result of free- market forces, as each country utilizes its competitive advantages to its benefit. There is no chicanery or foul play involved.

The U.S. has the technology, capital and a voracious consumer market for stuff, from cauliflower to washing machines and monster semis.

For its part, Mexico offers vast pools of cheap labor, increasingly well trained and English-speaking, plus its geographic proximity to the U.S. It’s cheaper, vastly cheaper, for both the multinationals and the American consumer to build Frigidaire refrigerators in Celaya than in South Korea, Argentina—or Michigan.

Although I haven’t seen any figures, I believe that, interestingly, the explosion in commerce is also behind the sharp decrease in undocumented immigration from Mexico during the past eight or ten years. Practically every young Mexican I’ve asked has worked in the U.S. without papers at some point, including Félix and two of his brothers.

But now everyone seems to be staying put or even returning home from a stint on the Other Side. The reason, I believe, is the lightning growth in jobs created by foreign companies, from the U.S., Canada and Europe, that are setting shop in enormous industrial parks, most noticeably in nearby Querétaro, whose economic growth is astonishing. Come six or seven o’clock in the evening one can see caravans of minibuses bringing workers back to San Miguel. Samsung seems to be a big employer.

If economic development on both sides of the border—and a reduction in undocumented immigration from Mexico—is what we’re after, Trump’s latest Twitter twit seems counterproductive, illogical, downright half-assed, particularly from a traditional Republican free-market perspective. 

Closer to San Miguel, throughout the state of Guanajuato, huge trucks hauling produce for the American market clog the the highways. Recently a semi loaded with garlic flipped over and for several hours we had the makings of aioli all over the pavement. The brand Mr. Lucky is an enormous producer of all sorts of greens, mostly for the U.S.

Let’s admit, too, this arrangement is not perfect. The guys who used to assemble Whirlpool washers in Michigan lost their jobs long ago in favor of the cheaper guys in Celaya.

And the poor bastards doing stoop labor under the sun for Mr. Lucky, so Americans can have broccoli year-round, earn miserable wages. Félix, and most of his adult family members, have worked in the fields picking cauliflower, and the pay was so awful, it’s hard to imagine how people can live on that, even in low-cost Mexico. Still, a crappy job may be better than no job at all.

Trump’s latest move, which will adversely impact this binational trade bonanza, and which in turn helps alleviate the illegal immigration problem, makes no sense at all. It has left even some officials in the White House and Republicans in Congress shaking their heads.

On the bright side, it’s quite likely this latest pronunciamento by Generalissimo Trump may never be fully implemented. It’s not the first time that this self-described “stable genius” has come with policies light on facts and logic. Mercifully, he also has the attention span of gnat, so we can expect this latest blast of bullshit will soon pass.

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