Trump tariffs on Mexico threaten Illinois prosperity
Atariff war against Mexico is exactly the wrong way to end a migration crisis, and Illinois will pay a particularly high price for such foolishness.
If President Trump follows through on a threat to impose a 5% tariff on all goods from Mexico starting on Monday, the effective tax increase on Illinois consumers and businesses will be $657.7 million a year. If Trump increases the tariff over the summer to 25%, as he also has threatened to do, the tax will grow to $3.3 billion.
Those are estimates from the U.S. Chamber of Commerce, not from Trump-bashing Democrats.
Trump is kidding himself if he seriously
believes imposing tariffs on Mexican goods will force that country to do a significantly better job of stopping caravans of Central American refugees from moving up through Mexico. The Mexican government already has stepped up deportations, but its immigration-control system is overwhelmed.
And punishing Mexico does nothing to address the root causes of Central American migration — violence, poverty and hopelessness.
We doubt Trump even cares what works. What he cares about is stirring up his anti-immigrant base in advance of the 2020 presidential election. He needs fresh red meat.
This time, though, Trump may be overreaching. The business community overwhelmingly opposes his tariffs on Mexican imports, which might not bother him, but so do most Republican lawmakers, who fear a voter backlash.
The economies of the United States and Mexico (as well as Canada) are so completely interstitched that there simply is no way to slap tariffs on imports from Mexico without hurting auto workers in Michigan, textile workers in Texas and beer truck drivers in Illinois.
Virtually every car or truck made in the United States includes Mexican-made components. Blue jeans made in Texas typically include raw materials from Mexico or were sewn in Mexican factories. A big beverage company like Constellation Brands depends heavily on its sales of popular imported Mexican beers such as Corona, Modelo and Pacifico.
In 2017, the auto industry in Illinois imported more than $1.2 billion in motor vehicle parts. A 5% tariff, according to the nonpartisan Center for Automotive Research, would add about $250 to the average price of a vehicle made here.
When Trump puts a tariff on any product imported from Mexico, he increases the price consumers and businesses must pay. That hurts Mexico, which is the point, but it also hurts the United States, which imported more than $346 billion in goods from Mexico last year. In Illinois, the tariff would mean increased prices on, in particular, beverages and tobacco, computers and electronics, agriculture and construction equipment.
The pain to American consumers and businesses would ratchet up, as well, if Mexico were to retaliate — as China did last year — by imposing tariffs of its own. Illinois companies exported almost $10 billion in goods to Mexico in 2017 — everything from auto parts to surgical instruments to plastics to corn.
Trump’s tariffs have stuck it to working people, as any Illinois farmer can tell you. At this moment, farmers across the state are worried that their corn crops have been ruined by the heavy rains this season, and some are thinking of switching to soybeans. But here’s the rub: China, the world’s largest soybean market, has imposed a retaliatory tariff on American soybeans.
Maybe Trump does not care whether he hurts Illinois. We suspect not. Illinois is a blue state, and Trump cares only about Trump.
But among the six states that, according to the U.S. Chamber of Commerce, likely would be hit hardest by Trump’s new tariff on goods imported from Mexico, only Illinois and California are Democratic strongholds. Michigan, Ohio and Arizona are key swing states in presidential elections, and even Texas no longer can be taken for granted by Republicans.
Sen. Ted Cruz, R-Texas, who usually is happy to slop around in the same anti-immigrant mud as Trump, had a word of warning for the president this time:
“I will yield to nobody in passion and seriousness and commitment for securing the border,” he told reporters Tuesday. “But there’s no reason for Texas farmers and ranchers and manufacturers and small businesses to pay the price of massive new taxes.”
When Trump looks at the caravans of migrants coming up from Honduras, Guatemala and El Salvador, he sees “invaders.”
They are not. They are desperate people. But if Trump can’t see that, maybe he can see his own best interests.
From Illinois to Texas, and even in the heart of MAGA country, this tariff war threatens to drag America down.