Every week is a crazy week in the Trump administration, but the week of April 1 produced a multitude of memorable moments all precipitated, in one way or another, by the president’s threat to close the southern border.
It started on March 28 when, during his first post-Mueller stadium rally in Grand Rapids, a delirious Trump threatened to “close the damn” border with Mexico. The following day (Friday, March 29), he reiterated the threat, this time on Twitter. Here’s what he said:
Mexico has the strongest [immigration laws], & they make more than $100 Billion a year on the US. Therefore, CONGRESS MUST CHANGE OUR WEAK IMMIGRATION LAWS NOW, & Mexico must stop illegals from entering the U.S……..through their country and our Southern Border. Mexico has for many years made a fortune off of the U.S., far greater than Border Costs. If Mexico doesn’t immediately stop ALL illegal immigration coming into the United States through our Southern Border, I will be CLOSING………the Border, or large sections of the Border, next week.
By Monday, the media had done their homework and so had Congress. As NPR wrote, “closing the entire US border with Mexico would… put the brakes on more than $1.6 billion worth of goods that cross back and forth every day, including 50 million pounds of fresh Mexican produce that now fills 100 warehouses in Nogales, Arizona.”
“Probably over half of what most consumers put in their shopping bag when it comes to fresh produce, they would find reduced quantities and higher prices”, said Lance Jungmeyer, president of the Fresh Produce Association of the Americas.
Mitch McConnell did not mince words. Closing the border would be potentially “catastrophic”, he said, flatly.
Amid the backlash, Trump tried to backtrack. “[Mexico has] made a big step over the past two days” when it comes to “apprehending people”, he said, while seated opposite NATO Secretary General Jens Stoltenberg. Minutes later, he unveiled a “strategy” to solve the border crisis, something he claimed could be achieved in “45 minutes” and would entail, “to be honest with you”, doing away with judges.
For reference, that was the same series of comments during which Trump claimed his father was from Germany. Asked by reporters whether closing the border with Mexico would impact the US economy, Trump said “Sure it’s going to affect the economy, it’s one of the biggest deals we’ve ever done, it’s called the USMCA”.
Two days later, on April 4, Trump blindsided everyone (including and especially Mexico) when, in a series of bizarre remarks delivered during one of his televised cabinet meetings, the president announced a one-year deadline for stopping the flow of drugs across the border. “We’re gonna give ’em a one-year warning, and if the drugs don’t stop, we’re gonna put tariffs on Mexico, and in particular cars”, he said. “The whole ballgame is cars. It’s the big ballgame”, he added, for emphasis.
By most accounts, nobody knew Trump was going to say that. And it got worse from there. He went on to explain the difference between the courts in Mexico and those in the US. According to Trump, Mexico doesn’t have any courts. He also suggested that when it comes to illegal immigration, the whole problem can be summarized as follows: “Set a foot on the property, congratulations, go get Perry Mason to represent you.”
The border shutdown threat and Trump’s one-year deadline faded pretty quickly from most folks’ memory given everything else the administration is involved in, although America would subsequently learn about all manner of nefarious plans Stephen Miller hatched for immigrants.
But, as it turns out, Trump never really gave up on the idea of using tariffs to compel Mexico to do more about drugs and immigration. According to three officials who spoke to the Washington Post, Trump’s “big league” announcement on the border (which he mentioned to reporters on Thursday morning) will take the form of renewed tariff threats.
“President Trump is preparing to threaten Mexico with new tariffs as part of an attempt to force the country to crack down on a surge of Central American migrants seeking asylum in the United States”, the Post wrote, adding that “Trump is planning to make the announcement Friday, but some White House aides are trying to talk him out of it, arguing that such a threat would rattle financial markets and potentially imperil passage of the USMCA trade agreement.”
For someone who measures his performance in Dow points, Trump’s penchant for testing the market’s patience is something to behold. The administration is deeply in the weeds when it comes to the worsening row with the Chinese and as detailed extensively on Thursday morning, negotiations with Europe haven’t even started in earnest. Mike Pence was in Canada on Thursday and in addition to talking tough on Beijing and teasing the NBA finals, he and Justin Trudeau both expressed confidence that new Nafta would be ratified this summer. Needless to say, a move by Trump to threaten tariffs on Mexico could derail it.
“It will be a statement having to do with the border and having to do with people illegally coming over the border and it will be my biggest statement so far on the border”, Trump said on Thursday morning, previewing his forthcoming announcement. “This is a big league statement.”
It would also be a “big league” shock for markets if the USMCA crashes and burns while the China dumpster fire is still raging.
Apparently unable to sit on the announcement until Friday after the Post leaked the plans, Trump made it official on Thursday evening. To wit, from the presidential Twitter feed:
On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied at which time the Tariffs will be removed. Details from the White House to follow.
WaPo dryly reminds you that the USMCA “aims to curb the type of tariffs Trump is now threatening to impose if Mexico does not stop the migrants.”
Nancy Pelosi on Thursday e-mailed a statement to the press after the White House sent Congress a draft of the new trade deal in an effort to expedite it. “[The administration] lacks knowledge on the policy and process to pass a trade agreement”, she lamented.
One imagines the announcement of tariffs against one of the parties to that same agreement will only underscore Pelosi’s misgivings. And those of the market.