No Agreement is Safe With Trump! (And Trump Just Proved It)

-edited

In case you have not figured this out, Trump cannot be relied on to honor any agreement he makes.

Trump infuriated Mexico and Canada smack in the midst of attempting to get Congressional approval for USMCA, his NAFTA replacement.

The interesting detail of Trump's latest tariff madness is that Trump went against the advice of his top trade adviser.

“Lighthizer is not happy,” an administration official, said. “This is something he’s talked about for a long time but people always talked him out of it.”

A spokesman for Mr. Lighthizer declined to comment.

Navarro Sides With Trump

President Trump’s trade adviser, Peter Navarro, told CNBC that Trump’s threat of new tariffs on Mexico came in response to that country’s “export” of “illegal aliens.”

Treasury Secretary Steve Mnuchin Also Opposed Tariffs

Administration sources say Mnuchin and Lighthizer opposed Trump tariffs on Mexico.

  • The surprise decision to announce the tariff plan came as Trump was “riled up” by conservative radio commentary about the recent surge in border crossings.
  • The opposition to the tariffs by Treasury Secretary Mnuchin and Lighthizer marked a rare moment of unity from two top administration officials with starkly different economic ideologies.
  • “Look at what we are trying to do. This is actually a brilliant move by the president to get Mexico’s attention, to get them to help us, because so far they have just been standing by,” Navarro said.
  • The tariff was pushed by adviser Stephen Miller, an immigration hawk, according to a source close to the White House.

Nearly 5 Million US Jobs Depend on Mexico

Texas and California are the top states.

Peter Schiff Chimes In

Mexican Peso Response

Manufacturing Integration

Stating the Obvious - Mexico Isn't China

Lie of the Day

What the Heck Happened?

  • Trump took advice from Peter Navarro and Stephen Miller rather than Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer.
  • Tariffs move USMCA, Trump's NAFTA replacement, firmly in the gutter.
  • 5 Million jobs are at risk.

Three Key Points

  1. There can no longer be any doubt that Trump reacts emotionally, not logically.
  2. Trump is not playing some amazing 3-D mind game, he is an economically illiterate trade fool.
  3. Trump just proved to the world that no deal is safe, even deals he negotiates himself.

Point three is the most crucial. No one can trust Trump.

I firmly believe a recession will do Trump in.

If I am correct, then it is in the long-term interest of countries to react in such a way that steepens any recession.

China may cooperate in that effort.

Mike "Mish" Shedlock

Comments (99)
No. 1-45
Menaquinone
Menaquinone

A clear case of America first, Mexico and California second. ☺

Mish
Mish

Editor

America First?

This is lose-lose policy

Misc
Misc

It is not a lose-lose policy if Mexico cuts down on the illegals coming into this country.

JonSellers
JonSellers

This will have the opposite impact Trump thinks it will. Illegals are coming into the country at unprecedented rates BECAUSE of Trump's promise to build a wall. They think that if they're going to get in, they better do it now. Putting economic pressure on Mexico is only going to increase the desire of illegals to head north. This is stupidity on an unprecedented scale.

But I disagree on a recession doing Trump in. Trump is running unopposed in the Republican Party. And the Dems will end up putting Joe Biden against him. I don't know anyone who would actually skip having a tooth pulled to go vote for Biden.

So 4 more years of lunacy. Best to just hunker down.

Matt3
Matt3

It's lose - lose if you are in the top exploiting the labor, regulatory and environmental cost difference in Mexico. Although if 5% tariff kills you, your business model sucks. It's also a loser if you're exploiting illegals to keep US labor costs down. For the rest of us, It's likely a win -win.

Escierto
Escierto

Interesting to see Mish talk common sense and then the Trump cult members respond with their blind adoration of their Messiah. They cannot be reasoned with because their beliefs are those of a religious belief in their Savior. In fact they would probably prefer that the US economy is completely destroyed before seeing their cult leader dethroned.

shamrock
shamrock

Wasn't it 5 seconds ago Trump removed tariffs on steel from Mexico?

shamrock
shamrock

So if he succeeds in crashing the Mexican economy then guess where the Mexican unemployed will be heading?

HubbaBuba2
HubbaBuba2

Countries and companies are walking away from the US because of Trump. Moreover, this was SO untimely. Not like immigration is all that different today such that he could not wait until getting UCANME passed. Now he's pissed that down the drain. WT*, burn bridges as fast as we can try and make them? "The “new threats of U.S. tariffs on Mexico - even as passage of the new USMCA seemed to be getting closer - is a reminder that no trade agreement or past indications of goodwill is really full protection against a re-emergence of tensions with the U.S. under the Trump administration, ” said Nathan Janzen, an analyst at Royal Bank of Canada, in a research note. “That uncertainty will remain a headwind for business investment spending in particular.”

Carl_R
Carl_R

It's certainly possible that Trump is playing some 3D mind game. After all, remember, he was Democrat. I sometimes wonder if he's a Trojan Horse, and his real purpose is to destroy the Republican Party. My prediction is that, as with Herbert Hoover, his legacy will be to leave the Democrats with a lasting majority in both houses of Congress, and no close contests in Presidential elections.

Mike Deadmonton
Mike Deadmonton

Trump 2020? Makes impeachment so much easier. If Trump was smart (hahaha, geeze I crack myself up) he would claim that he can no longer serve, as his bone spurs are acting up.

tz3
tz3

We need to stop the flood of Illegals coming here. I didn't see you propose your alternative idea how to stop the flood or get Mexico to do it. Please tell everyone how you would handle it.

Trump said he would fix Immigration - that too was a "deal". Because Paul Ryno betrayed him last year at the march shutdown, and because judges are blocking a lot of other things, TRUMP IS KEEPING THE DEAL WITH THOSE WHO ELECTED HIM in a rather blunt instrument way, but this isn't an economic deal, Mexico refuses to stop the illegals and drugs from coming over the border.

Maybe you should stay in the Chicago "sanctuary" area so you can deal with all these illegals and help pay for them instead of fleeing for a lower expense state that doesn't have to deal with the costs of this.

The only other alternative is to do things like bomb the roads, rails, bridges, and ports in Mexico to stop the flow ourselves. I don't think you would prefer that.

Cocoa
Cocoa

Why don't we just enforce laws making the hiring of illegal immigrants and paying them in cash(TAX fraud)??? Instead of picking on Mexicans-take the businesses to task. We all know where they work. Impose a fine of 30k per worker not tracked by the IRS and getting taxes deducted. That will stop the need for cheap labor cold-except we need them

Blacklisted
Blacklisted

Okay, let me see if I have this straight. You think countries that will be hurt worse than the US, should cut off their nose to spite their face? It is not in their long-term interest, but it is in the US’s long-term interest to reduce the flow of ILLEGALS. With your logic, we should blow up our economy so immigrants will stop coming here for jobs. One question – how do you realistically propose to solve the problem, since you know the establishment CONgress does not want to solve the ILLEGAL immigration problem.

abend237-04
abend237-04

Mexico couldn't stop the stampede at this point if they wanted to, and they don't. Various estimates have the Mexican revenue per immigrant in the form of coyote payments plus cartel, police and Mexican army extortion at around $2,000 per immigrant. This represents a huge criminal constituency supporting trans-Mexican immigrant traffic while there is no Mexican political constituency opposing it.

Predictably, Mexican politicians have begun wrapping themselves in the flag and threatening 10% tariffs in retaliation. There is always a Mexican political constituency for anti-yanqui demagoguery.

The only viable option remains that we enforce our own laws, starting with E verify, not extort Mexico to enforce theirs with the threat of tariffs. We won't be doing that because both national parties view immigration law enforcement as the third rail of campaign funding: Touch it and you're dead. Campaign contributions from business (where the money is) will dry up overnight.

Augustthegreat
Augustthegreat

You do not understand Trump: Trump is not playing 3D or 4D game with the world, he is playing 5D! He is clearly the greatest Emperor!

Carlos_
Carlos_

No Agreement is Safe With Trump! (And Trump Just Proved It)

I am sorry that you are actually realizing that. Let see

  1. He lied to banks to get loans that he agree to and and then got out of them by bankruptcy.
  2. He marry many times and broke his marriage agreement by cheating and divorcing every wife he had
  3. He has broken friendship agreements every time he had to save himself.

The important thing here is not so much that he is a liar that can not be trusted. The important thing is that despite all of it you have 45% of the country that would vote for him again. If that is not a dysfunctional country I have no idea what is. BTW he will be another Chavez regardless of being from the right, left, middle bottom it does not matter he will destroy this country

thimk
thimk

excuse my ignorance , but i thought the National Emergency that trump declared enabled powers that could be used to deter the mass migration . Anyways 1 million more illegals will be exporting dollars back to their corresponding countries of origin. @abend237-04 is correct: the Mexican illegal human smuggling/travel business is very lucrative . Mucho dinero

Greggg
Greggg

Halfway through Donald Trump’s presidency, Israel’s decades-long role in Central America is scaling new heights of military and political influence.

Sechel
Sechel

This was my first thought. Mexico has a trade agreement, currently NAFTA. What's the point of a trade agreement if at any moment they can be hit with tariffs? This is yet another example where Trump has no strategy just tactics. It's also a perfect example of how Trump is not a chess player and can't look past one move instead of three or four.. Terrible policy if you can even call it policy

Sechel
Sechel

So how is wrecking Mexico's economy going to reduce immigration from Mexico. Probably increases it if anything.

truthseeker
truthseeker

Thanks for giving me a chance Mish as I was rambling sorry.

Sechel
Sechel

get ready for higher produce prices and shortages

Cecil1
Cecil1

Its a great move.

Everyone wants to prevent a much needed wall. Well, this is needed.

Good on him.

Free trade is not a policy to be worshipped, but only used when appropriate for both sides.

America is a nation, not an economy.

Casual_Observer
Casual_Observer

Yesterday I wrote Trump wont make it to November of 2020 and some laughed. The odds that he doesnt complete his first term are going to rise as the crises he creates deepen. If it comes out that he is not of sound mind by his own cabinet then removal by his cabinet cannot be ruled out.

Sechel
Sechel

I don't believe this has anything to do with immigration at all. Trump had a bad few days on Mueller and then on this McCain thing. When Trump goes off balance he does rash things and tries to change the subject. He typically goes back to the wall and immigration during such times. Wasn't it just the other weei Trump was going to drop tariffs on Mexico and Canada so has not to have a two pronged trade war? This was totally out of the blue and not planned. Rash decision done in a fit of anger. The impetus probably wasn't even immigration and ws probably a combination of John McCain and Bob Mueller

Augustthegreat
Augustthegreat

I have thought that USA is a democracy with check and balance. But what I see in reality is that Trump basically can do whatever he wants on this planet! Long live the greatest emperor!

TheSpangler
TheSpangler

There should be tariffs due to the US and Mexico having different environmental and labour laws, good luck determining what exactly those should be.

Runner Dan
Runner Dan

The degree to which an economy is “fair” is the degree to which an economy is “best”. The problem in the US is that for the last 50+ years, only two sectors have been even close to “fair”: low wage labor and the technical sector (which includes manufacturing). Every other industry has enjoyed unfair advantages such as ridiculous credentialing processes, massive government subsidies, citizenship requirements, and large scale bail-outs to name a few. So now Trump comes along and decides he’s going to stick up for the domestic manufacturers who have been the last man in the chain gang for multiple generations and everyone is a hooten and a hollering about how horrible it will be – and they are mostly right! Except it won’t be so bad for the manufacturer who will get to feel like most everyone has felt for ever so long. So, when we tire from the sting of higher prices as a result of not being able to take advantage of 3rd world slave labor and environmental regulation cheaters, let’s just call a truce and strip away all artificial moats and government interventions as we open up our markets to international trade again (as we ought). However, I don’t think most people want to play that game.

So, tariff away Trump!

CzarChasm-Reigns
CzarChasm-Reigns

"No agreement is safe with Trump"... And by extension, fair to say "NO COUNTRY is safe"? And "in case YOU have not figured this out"... the USA is not excluded.

Menaquinone
Menaquinone

President Trump made Mexico an offer they can't refuse. Trust him. Tariffs increase 5% per month until the election or until the illegal invasion from Mexico comes to a dead stop.

RealNewsChannel
RealNewsChannel

I wish DT would permanently close the border completely. I'd rather have a recession than tens of millions of invades who have already overcrowded and ruined our public schools, emergency rooms, highways and turned entire neighborhoods into foreign pest holes.

Close the border. End trade entirely. And return to "Made in the USA".

MorrisWR
MorrisWR

Everyone is missing the 10-D chess move by Trump. Increase tariffs, US economy goes into recession, jobs lost, wealth disappears, illegals no longer come to a prosperous America. How can we not see the logic?

ReadyKilowatt
ReadyKilowatt

The true nature of our "4D chess playing" commander in chief:

dltravers
dltravers

Trump is lashing out in frustration because he cannot solve this problem in Congress and the Courts are going to tie him up for years. A guy who managed casinos is taking a high risk with the economy. Mexico can stop the high degree of immigration quickly if they wanted to partner with the US on the issue. They may back down because the threat appears real.

If Trump fails its recession and even higher rates of immigration. Chaos in the south will make that happen. Trump still does not realize that he in not the CEO of the country.

People are flooding in here because the Democratic machine is running a propaganda operation in the south pushing these people to immigrate here along with their favored NGO's who are helping people to push across the border in record numbers. They want the states to change over to their side and they know that this will do the trick.

Do not count Trump out, the egghead economists wrecked our system with their theories put into practice. Global free trade was always an illusion based on making things cheap and selling them into our consumer economy with big profits.

If Trump wrecks the economy that only outs him on par with the eggheads.

lol
lol

Mexico tariff is pure bluff,Trump talkin smack,if he wanted tariffs on Mehico why did he sign off on that USMCA farce?He knows tariffs south of the border will collapse the auto industry,virtually all vehicle parts come from Mexico via China,vehicle prices already rising 10-12% a year now!How are dealers gonna tack another 10%to the sticker price...…...short answer ….they can't!

Blurtman
Blurtman

Long ketchup, short salsa.

golf0473
golf0473

The point is we will have to sacrifice by paying more but more likely not buying from Mexico and China because their prices aren't as good. They have inferior products but people buy them because they are cheaper so it may be a good thing to pay more but get it from another Country which in turn hurts their employment and also a fear that once we get used to paying more we may also stick with the better and higher priced products.

Realist
Realist

For the last four years I have disagreed with Mish and said that the only reason the US would drop into recession in the foreseeable future would be a black swan event.

For the last two years I have said the most likely economic shock would be Trump expanding his trade wars. However, I also believed that this wasn’t likely because Trump’s advisors would talk him out of such a self-inflicted wound. I guess I’m going to be wrong about the advisor part.

Another statement I have made many times is that there is no point negotiating anything with Trump because he would never keep his word.

Even I am astounded now by Trump’s stupidity. Apparently he is willing to force an unnecessary recession.

Worst President ever.

Mish
Mish

Editor

"President Trump made Mexico an offer they can't refuse. Trust him. Tariffs increase 5% per month until the election or until the illegal invasion from Mexico comes to a dead stop."

Ignorance of Economics of some on this board is even more amazing than Trump's ignorance.

If Mexico closed the border (Trump threatened to), hospitals would not get supplies, and automakers Ford and GM could not get parts. That's just a start. Mexico can hurt the US far more than the other way around.

Perhaps that even true with China, if it embargoed rare earths.

Regardless, China can play the long game, the US cannot.

Realist
Realist

It will be interesting to see how many foreign owned companies operating in the US qualify for government subsidies that Trump will be handing out as a result of his terrible trade policies. Smithfield foods, the largest pork producer in the US, has received subsidies in the past and will likely receive a lot more in the future. It is owned by the Chinese. You’ve got to appreciate the irony.

WJ03
WJ03

Two thousand illegal aliens crossing every day and all the big brains on this site can concern themselves about is the precious avocado price. Mexico is aiding and abetting the invasion.

Cforbes
Cforbes

If a tariff gets their attention and they take action, it will be worth it.

rach1902
rach1902

might agree with everything you say in this article. but not sure about your statement " No one can trust Trump. I firmly believe a recession will do Trump in."

for Trump to lose an election would seem to imply that the Democrats are going to win in 2020.

now that's a highly remote possibility.

as for Trumps untrustworthiness; well that is like saying that he is not popular with certain interest groups, (ie he pissess off A,B,C,D and E) then that mayce neither here nor there.

and it may well be what endears him to a lot of other people.

HubbaBuba2
HubbaBuba2

Here's the Trump [deceptive] words and [NON] logic. If USMCA is the “Greatest Deal Ever” then why would you "Trump" it by tariffs?? [Because every day is a new "best" adjective spewn festival.