Trump’s tariff deal with Mexico on immigration, explained
President Trump’s plan to impose a 5 percent tax on all Mexican imports was canceled over the weekend, in a natural end to a process that centers on a president who loves drama while disdaining policy details.
The New York Times reported this weekend that Trump dropped the tariffs as part of a bilateral deal with Mexico on immigration (and possibly also agriculture). Essentially, Trump finally agreed to accept commitments that Mexico made late last year, back when Kirstjen Nielsen was still secretary of homeland security.
As Eliana Johnson and Nancy Cook wrote for Politico, it looks like Trump once again created a crisis and then “cut a vague, imperfect or constitutionally questionable deal at the last minute, claiming victory and savaging the critics.” As they further explained, this pattern of drama followed by climbdown is “getting eerily familiar in Washington.”
Trump’s tariff plan was deeply controversial in the White House and among Senate Republicans from the get-go. He presented a vague initial framing of his actual policy objectives that would let him adopt a “declare victory and go home” option regardless of what happened, which is what he appeared to do in the end.
In the short term, it’s almost certainly for the best. Tariffs would have been harmful to the economies of both the US and Mexico. Mexico’s agreement to clamp down on asylum seekers, meanwhile, likely won’t resolve the underlying issue, but it may help, and the coming change of the seasons should somewhat reduce the northward flow of people anyway.
And while Trump’s allies in the media are loudly championing the arrangement as yet another triumph of the master dealmaker, the bulk of press coverage has been skeptical and there’s no reason to think any of this has been moving the polls.
For the longer term, Trump has once again exposed a critical loophole in how American trade policy works — a loophole that makes us an inherently less credible negotiating partner in any kind of future deal and that may make cross-border commerce more systematically difficult in the future.
A quick summary of events
Nielsen was the most aggressive immigration hawk in the (admittedly brief) history of the Department of Homeland Security, but that wasn’t good enough for Trump, who fired her in early April.
The basic problem was this: Shortly after Trump’s election, the flow of asylum seekers from El Salvador, Honduras, and Guatemala dropped sharply. But over the course of 2018, the “push” factors leading people to seek refuge from Central America continued to be in place, and would-be migrants discovered that despite the sharp change in tone coming from the Oval Office, the actual underlying legal situation was still broadly similar. Consequently, the number of families seeking asylum surged to unprecedented levels and continued to surge into the spring of 2019.
But replacing Nielsen with an even tougher acting DHS secretary did nothing to stem the tide, and April was another record month for asylum-seeking.
That provoked Trump to take the drastic measure of invoking the International Emergency Economic Powers Act to threaten the imposition of taxes — starting at 5 percent and escalating over time to 25 percent — unless Mexico agreed to policy changes that would stop Central American asylum seekers from making their way to the US-Mexico border.
The dream scenario for Trump would be for Mexico to sign a “safe third country” agreement with the United States. With such an agreement in place, the United States could simply send any Central American found to have crossed from Mexico back to Mexico on sight. Any asylum claims would need to be made there rather than in the US. Mexico has been reluctant to do that, both because the country is not in fact particularly safe from the kind of violence that people are fleeing in Central America and because Mexico fears being overtaxed by a flood of would-be migrants.
But when the Trump administration announced the tariffs, it didn’t demand a safe third country agreement as the price for dropping them. Indeed, it didn’t demand anything in particular.
“It will be at our discretion,” acting Chief of Staff Mick Mulvaney explained on a press call announcing the tariffs. Later on the same call, acting DHS Secretary Kevin McAleenan declined to clarify what Trump’s goals were, simply saying “we’re going to handle this on an ad hoc basis.”
Then on Saturday, the president announced a deal that did not include a safe third country agreement. Shortly thereafter, the New York Times reported that the concessions Mexico made in the deal were not new — which Politico subsequently confirmed.
….stem the tide of Migration through Mexico, and to our Southern Border. This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States. Details of the agreement will be released shortly by the State Department. Thank you!
— Donald J. Trump (@realDonaldTrump) June 8, 2019
At that point, things started to get weird as Trump began claiming that the US-Mexico deal included other secret provisions — including some related to agriculture.
What is actually in the deal
Based on the official statements from the American and Mexican governments, the centerpiece of the deal is that the Mexican government is committing to deploying 6,000 National Guard troops to southern Mexico to try to better secure the flow of people north from Guatemala.
According to the Times, however, “Mexican officials had already made the same promise months earlier when Ms Nielsen met in Miami with Ms. [Olga] Sanchez [Mexico’s interior minister] and aides to Marcelo Ebrard, the Mexican foreign minister.”
From the American perspective, one could say that what’s new is that Mexico has made a more specific commitment to deploy a large number of National Guard troops and also that the negotiations persuaded the Mexicans to stop dragging their feet on this topic.
But whether this will actually work is anyone’s guess.
Trump administration officials spent the crisis week talking very enthusiastically about the notion that the Mexico-Guatemala border is a fairly short 150-mile stretch that it should be easy to secure with a troop deployment. But the actual Mexico-Guatemala border is more than 500 miles long and mostly runs through rough terrain.
I’ve heard a few US officials state in recent days that Mexico’s border with Guatemala is “only 150 miles” long and would be easy to harden. That’s false. It’s 540 miles long, and much of it is wild jungle. In 2011 @BoothWilliam and I drove the whole thing https://t.co/fn0tNjzCeh
— Nick Miroff (@NickMiroff) June 5, 2019
The 150-mile stretch that Americans would like Mexico to use is a place called the Isthmus of Tehuantepec, which separates the Mexican states of Chiapas, Tabasco, Campeche, Yucatan, and Quintana Roo from the rest of the country.
I don’t generally like tariffs either. But what alternative do my GOP colleagues have to get #Mexico to secure its southern border,use the Isthmus of Tehuantepec to screen northbound rail cars & vehicles & act on intel we provide on human traffickers? https://t.co/9qNiRN4Mek
— Marco Rubio (@marcorubio) June 5, 2019
Sealing this internal border might well be operationally feasible, but there are huge questions over how tight a seal Mexico will really want to put on an internal land border.
Meanwhile, hanging over the entire negotiation is the question of how much Mexico can genuinely do about any of this. Under the past several administrations, the Mexican government has rather famously struggled to constrain the activities of various criminal enterprises involved in the smuggling of both drugs and people. If relatively new President Andrés Manuel López Obrador had a magic wand he could wave to make these organized crime problems go away, he would almost certainly wave it regardless of anything Trump says or does for his own domestic political reasons.
The National Guard itself, after all, is a brand new institution approved by Mexico’s congress on the last day of February and whose efficacy is an entirely untested proposition.
Trump essentially extracted a promise from Mexico to sincerely try, which is valuable if you think the previous problem was lack of effort rather than actual lack of capacity, but not much more beyond that. Unless, of course, the deal has other secret provisions.
Trump is touting seemingly fake aspects of the deal
On its face, this appears to be a case of much ado about nothing, and the press didn’t fall for Trump’s oft-used political trick. The trick, in short, has stopped serving its political purpose. So this time around, Trump is gilding the lily.
Saturday morning, he announced that the agreement also featured agricultural provisions that would be a boon to America’s “great patriot farmers” — a constituency that generally aligns with Trump’s brand of identity politics but that has suffered from his trade wars.
MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCT FROM OUR GREAT PATRIOT FARMERS!
— Donald J. Trump (@realDonaldTrump) June 8, 2019
Trump followed that up Sunday morning with a four-tweet thread denouncing the media’s reporting on his deal and insisting that the agreement with Mexico included “some things not mentioned in yesterday [sic] press release.” Things that “will be announced at the appropriate time.”
Mexico’s ambassador to the United States, Martha Bárcena Coqui, subsequently explained on CBS’s Face the Nation that her understanding of the agricultural products situation is simply that removing the threat of tariffs and resuming cross-border trade will naturally lead to more sales for American farmers. This is almost certainly true — Mexico is a major destination for American agricultural exports. The reality or threat of tariffs, however, tends to depress the value of the Mexican peso, which makes it harder for Mexicans to buy American stuff, which tends to depress American crop prices. The win for farmers, in other words, is real enough, but the win is simply that Trump backed down from his threats.
Now, it’s possible that Trump is telling the truth and his deal with Mexico includes other secret provisions that, if disclosed, would make him look really savvy but are being kept quiet for some unknown reason. Realistically, though, Trump did permanent damage to the US-Mexico trade relationship and accomplished nothing in exchange.
The trade damage here is hard to undo
The United States and Mexico have been locked in a close trade partnership ever since NAFTA went into effect in the mid-1990s.
Pre-NAFTA, the United States already had very low tariffs on Mexican goods, but the deal persuaded Mexico to substantially open its markets to American exports while also dismantling regulatory barriers to Mexican produce traveling north (this is why avocados often feature prominently in discussion of US-Mexico trade). But more significant than the specific tariff changes was a sense of permanence, stability, and legal enforceability. NAFTA encouraged big international companies to open factories in Mexico whose output was bound for the United States, which of course is exactly why a lot of people in American manufacturing communities didn’t like it.
But like it or not, NAFTA has been in place for a quarter-century, and at this point, a very complicated logistical supply chain for cross-border trade in auto parts is a critical feature of the North American automobile industry.
What Trump did by invoking a law that’s only ever previously been used to apply narrow sanctions is disrupt that sense that NAFTA offers a fixed legal framework for North American trade. Indeed, the tariff announcement came the very same week that Trump’s NAFTA successor deal was first introduced in the Mexican senate. The souring of relations between the US and Mexico may imperil passage there. Meanwhile, it’s not obvious that Trump has the votes for his deal in the US Congress either.
And there’s fundamentally no unringing the bell. Trump imposed these tariffs despite NAFTA by invoking an international emergency statute that in the past was used to deliver targeted sanctions against rogue states. By doing so, he’s fundamentally thrown into doubt whether any kind of American agreement is really worth the paper it’s written on. If you believe that international economic integration delivers big benefits for most people, that’s a disaster. But Trump has never believed that. So what looks like a major cost of his approach to most people might look like a benefit to him.