According to the ITAM Economist Manuel Molano, the Trumpian notion that trade and business are zero-sum games, and that Mexico is the enemy of the United States, is a 21st-century version of “Manifest Destiny” and the Nazi Lebensraum. Both theories turned out to be wrong, and Mr. Trump’s nationalist theory could also turn out to be wrong.
Mexico´s only ´sin´ has been to painstakingly develop Mexico into a world leading manufacturing nation.
The perfect storm which has allowed this to happen includes America´s multi trillion dollar bailout program incited by the banking sector´s self-induced financial crisis, over a decade´s worth of quantitative easing measures, the count’s soaring cost of healthcare, racism and social segregation, increasing drug addiction and a failed education system that is prohibiting its people from entering highly paid employment.
Although the US executive has broad powers in trade matters, Trump cannot cancel NAFTA easily because the United States is a more open nation to countries with which it has no trade agreements than Mexico.
If cancelling the treaty does not work, Trump’s anti-Mexican stance will lead it to impose trade safeguards, such as anti-dumping quotas on select Mexican products. These measures do not work in the long term, but as long as it takes the arbitration panels (inside or outside the NAFTA) to resolve it, the damage to Mexico will have been done.
Alternatively, Trump may choose to close the gas or maize supply by imposing taxes or other restrictions on the export of these products. Imposing sanctions on Mexico will only serve to destroy supply chains that are seamlessly integrated, where inputs cross the border several times before becoming a final product.
The bottom line is this: If you buy or sell in the United States, talk to your customers and suppliers, and tell them that Trump’s vision is wrong.
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