Following a series of controversial proposals and the withdrawal of the United States from the Trans Pacific Partnership, many are holding their breath as they await the Trump administration’s next move on trade.
Trump’s proposals, such as a 20 percent tax on imports from Mexico, might not only sour our relationships with some of our closest allies, but could also cause the cost of our imported goods to go up, in effect punishing American consumers and manufacturers. A higher cost for goods means less consumer demand, slowed down port activity, and ultimately lower revenue and reduced job growth at U.S. ports. It could even result in job losses.
The West Coast’s ports will be especially impacted since the transfer of goods between Mexico and the U.S. largely takes place there. Moreover, Trump’s proposal would be especially damaging to the agricultural industry. California, which leads the United States in agricultural exports, would be hit the hardest.
The trade relationship between the U.S. and Mexico is a crucial one, and has a record of being susceptible to conflict. Mexico may not hesitate to counteract any additional costs incurred by the United States. Even in recent history, Mexico has retaliated against the U.S. by exacting tariffs on American agricultural exports when the U.S. violated NAFTA provisions. That episode cost the U.S. agricultural industry nearly a billion dollars in sales. Hopefully, history will not repeat itself as the Trump administration develops its policies.
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