Economist Emily Oster writes in Quartz:
“So how does this relate to Mexico? In this case, the suppliers are the ones who should have an easy time finding a substitute for American purchasers. Mexican companies will likely to be able to shift their sales elsewhere. (China will love avocados!)
But since people in the US buy a lot of products from Mexico, there are not such easy swaps. So the prices to the consumer will go up, potentially by almost the entire tax.
The only thing that would be worse is a tariff on all imports.”
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Let’s see. Mexico has oil and products to sell, but needs foreign investment and markets to offset the U.S.
China has investment capital and potential consumer markets up the wazoo, but has an insatiable appetite for oil and wants to establish a dominant economic and political position in the Pacific. The U.S. is unilaterally withdrawing from the Pacific market and leaving the field to China.
Mexico borders on the Pacific. Mexico needs a foreign partner to give it leverage against the U.S. China would love to build a friendly economic powerhouse on America’s southern border.
I’m only a retired judge, not an economist, but it sure looks to me like the Trump Administration is setting us up to be the “big loser” here.
Oh, yeah, the United States grows our own avocados. So who needs Mexico? But, if we actually succeed in barring Mexican workers from the U.S, who’s going to pick them, and at what price?
Mexicans and Mexican-Americans have been helping to support the U.S. economy for years with their hard work in essential jobs that other Americans don’t really want or can’t do as well. At the same time, they have served as convenient scapegoats for failed (mostly Republican-inspired) U.S. economic policies. Mexican workers, whether legal or undocumented, didn’t cause the mortgage crisis that led to the most recent U.S. recession.
Up until now, Mexican leaders have talked big, but essentially “bought into” Trump’s “we own you, whatcha going to do about it” attitude. At some point, however, they might work up the courage to get out of their historic dependency on the U.S., look around, and see that there is a “brave new world” out there — one that would like to do business with someone other than Donald Trump.
If so, those of Americans who can’t afford the $12 avocados might find themselves out there picking them. After all, Trump did promise to create new jobs; he just failed to mention what kind.
PWS
01/27/17