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They’ll hate our guts

June 9, 2016 - David Kruse
The U.S. Treasury expects Mexico’s economy to grow 2 to 3 percent this year. 80 percent of its exports go to the U.S. Were it not for the stable economic growth and low 4 percent unemployment, the Mexican drug trade would be employing even more desperate Mexicans and there would be an intense outflow of emigrants to the U.S. Mexico’s economic stability has stemmed the net outflow of its citizens north across the border. Mexico’s economic growth and trade with the U.S. reduces the drug cartel’s grasp on the Mexican public and actually has resulted in a net inflow of expatriates from the U.S. back to Mexico. The irony now is that a wall would complicate their return. Fewer would leave the U.S. voluntarily knowing that it would be more difficult to re-enter the U.S. again when the wall is constructed. With economic growth in Mexico, they have something to come back to. The reason they left is economic and if they can find a job in Mexico much of the motivation for entering the U.S. is mitigated. While many complain because U.S. manufacturing jobs have gone south of the border, trade with Mexico has resulted in the creation of jobs north of the border, too. The economic growth in Mexico has generated strong demand for U.S. agricultural products. It gives them money to spend and they are good customers for the U.S. ag sector. They are often the No. 1 U.S. corn and pork export buyer in given months. When they make money, they spend it here on food. I can see no reason why it would be in the U.S.’ best interest to keep Mexico poor and destitute. Having a stable economic trading partner on our southern border has improved conditions and relations between the two countries minimizing security risks. Donald Trump’s proposed trade and immigration policy will cost us a whole lot more than he suggests. It would be devastating to the Mexican economy and Mexico, yet I have never heard anyone comment on its impact on them. Having them pay for the cost of the wall would be just a small part of it. Trump would force the Mexican economy into deep recession. 35 percent tariffs on U.S. companies manufacturing there would damage both economies. It would upend NAFTA and no one would ever believe the U.S. could keep a trade agreement again. This equivalence of a trade war with Mexico would be devastating for them and would not result in the amazing positive result for the U.S. that Trump trumpets. Most experts believe that a wall would cost $25 billion, but Trump says he can get it built for half price. To cover the cost from Mexico Trump says the U.S. will: ? Impound all remittance payments derived from illegal wages. ? Increase fees on all temporary visas issued to Mexican chief executive officers and diplomats (or, if necessary, cancel them). ? Increase fees on all border crossing cards, of which we issue about 1 million to Mexican nationals each year (a major source of visa overstays). ? Increase fees on all NAFTA worker visas from Mexico (another major source of overstays). ? Increase fees at ports of entry to the United States from Mexico (Tariffs and foreign aid cuts are also options.) Mexico will then have to make a choice: (1) Either make a single payment ... to the United States to pay for the wall; or (2) lose most of the remittances that Mexico receives every year from its nationals working illegally in the United States.” A Trump memo said, “They’ll probably capitulate and make a one-time payment of $5 to $10 billion to prevent the regulation from going into effect. Remittances serve “as de facto welfare for poor families in Mexico,” Trump explains. There is no significant social safety net provided by the state in Mexico. In short, the Mexican government will have to choose between forsaking its poorest citizens or building Trump’s wall. It will be an easy decision for Mexico. Does that sound Christian-like to you? Again you force the Mexican economy into recession and then cut off funds going to its social safety net — but that is not all. Trump wishes to deport undocumented Mexican immigrants now in the U.S. en masse. It would take a few billion dollars and a gestapo of some type to round them up and herd them south through the wall into a country that is now in deep recession with no jobs and no working safety net. We would literally create a hell south of the border and send them there. No American would dare vacation in Mexico for the security risk so that part of their economy would collapse, too. If that didn’t create a Mexican version of Al-Qaeda I don’t know what the heck would. Deporting 11 million undocumented immigrants would represent 3.5 percent of the U.S. population and slice off nearly 2.5 percent of U.S. GDP from lost productivity and reduced consumer spending. Business that now rely on these workers, including the ag sector, would be disheveled, resulting in shortages of many services and higher costs. That is all going to happen before the first manufacturing job returns to the U.S. if any ever do. The first jobs created here will be the government hiring gestapo-like agents to chase them down. Trump said he will do this in two years which would be a mad manhunt tearing at the fabric of the U.S. Asking people for documentation on the basis of race is unconstitutional. One irony is that 25 percent of imports from Mexico are American made. In other words, the raw product from the U.S. is improved in Mexico before being imported here to the states. It is estimated that the tariffs that Trump would impose on Mexico would cost Americans $250 billion more annually in higher costs of goods and when in recession, Mexicans will have no money to buy much, but the necessities of survival from us and they will source them elsewhere if at all possible. Mexico will be made into an enemy that will hate our guts to the core. I don’t see how this “Makes America Great.”

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

 
 

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