On Friday, nearly three hours before the closing bell on Wall Street, Donald Trump teased a deal with Mexico that would avert the imposition of across-the-board tariffs on imports from America’s southern neighbor.
“If we are able to make the deal with Mexico, & there is a good chance that we will, they will begin purchasing Farm & Agricultural products at very high levels, starting immediately”, Trump said. Stocks liked the tweet, but not because of the vacuous promise about farm products. Rather, because it appeared to suggest that Trump might back off on his latest tariff escalation.
That tweet helped propel stocks to a fourth consecutive day of sizable gains, rounding out the best week for the S&P since November. Trump noticed. “Dow Jones has best week of the year!”, he shrieked, just before dinner time.
Fast forward seven hours from Trump’s original tweet about the farm products and the president announced that the Mexico tariffs were suspended “indefinitely” due to an agreement which was subsequently posted, in the form of a joint declaration, to the State department’s website.
The “deal” was short on specifics when it came to targets and enforcement, but it was altogether devoid of allusions to the promised purchases of US agricultural products. That omission wasn’t lost on anyone.
Under pressure to explain things, Trump simply tweeted the promise again, this time in all caps:
MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCT FROM OUR GREAT PATRIOT FARMERS!
Well, as it turns out, Trump was lying. And “big league”.
There was never an agreement for Mexico to purchase more US farm products, let alone at “very high levels”, as Trump claimed. That’s according to three Mexican officials who spoke to Bloomberg.
Mexico is of course a big purchaser of US agricultural goods, but Mexican officials said “Mexico’s purchases from the US weren’t discussed during the three days of talks in Washington that led up to Friday’s agreement.”
Got that? Not only was Trump lying, this didn’t even come up.
And it gets funnier still, because as Bloomberg goes on to dryly note, “Mexico has no state-owned agricultural conglomerate to buy food products or handle distribution, or a government program that could buy farm equipment for delivery to producers.”
Why would Trump tell such an obvious lie? Well, it could have something to do with the fact that farmer sentiment, as measured by the Purdue University/CME Group Ag Economy Barometer, fell 14 points in May to 101 – that’s the lowest level since October 2016 or, more to the point, the lowest of Trump’s presidency.
The same report showed the Large Farm Investment Index diving to 37 in May, down 11 points from April and the lowest since data collection began in 2015.
Farmers have obviously been on the frontlines of the trade war. The government has now spent (or earmarked) more than $28 billion on emergency aid to American agriculture as a direct result of the trade war.
On Saturday, Trump was already touting the “deal” with Mexico in e-mails to donors.
The campaign also sent out text messages which read: “Pres. Trump: It’s called the Art of the Deal! Mexico has agreed to help END ILLEGAL IMMIGRATION. Donate to Secure The Border Fund NOW”.