Just a few days ago Donald Trump threatened to impose tariffs of 5% on Mexican goods and services sold in the US. He has been growing ever more concerned about immigration from Mexico to the US which at times appears to be uncontrollable. While his threat to impose 5% tariffs on Mexican goods and services was met with derogatory headlines, it seemed as though it has done the trick.
Mexican government responds
There are reports today that Donald Trump has withdrawn his threat to impose 5% tariffs on Mexican goods and services. It would appear that the Mexican authorities have authorised the use of 6000 army personnel to control immigration from Mexico to the USA. How long this will last remains to be seen but it is certainly being taken as a victory for Donald Trump. However, has he now used the tariff card once too often?
Trade agreements are extremely important
The list of countries which have received the threat of tariffs from Donald Trump continues to grow. There have been issues with Canada, the European Union, China and now Mexico. Unlike previous US presidents, who were afraid to take such an aggressive approach, Donald Trump has found the weak point of many countries. US trade is an integral part of worldwide trade, hence the reason why the US has run a trade deficit for many years. However, it looks as though the days of the US funding other countries may well be coming to an end.
Will someone call Donald Trump’s bluff?
At this moment in time it is difficult to see who would have the confidence and the strength to call Donald Trump’s bluff. The Chinese government has huffed and puffed but so far failed to blow down the defensive walls of the US. In many ways, anything that Donald Trump does at the moment tends to attract controversial and negative headlines. He is what many would describe as a Marmite character – you either love him or hate him!
Talks with the European Union have been going on for some time and while some progress has been made of late, there is still a long way to go. The only other major economy in the world which could stand up to Donald Trump in some shape or form is India. However, it is noticeable that he has not yet chosen a fight with this part of the world.
Helping US businesses
The main concern today is that all of the work undertaken by Donald Trump could be unravelled and underdone under the next US president. Hopefully, this will not come before the inevitable benefit to US businesses of more balanced trading agreements. At this point it would be difficult for any future president to backtrack and dig up the foundations built by Donald Trump. In many ways this could be the long-term legacy of perhaps one of the most disliked US presidents of all time – a prosperous economy!
Conclusion
There is no doubt that Donald Trump has found the weak point of trading partners when looking to address issues such as immigration. Recent figures suggest that the US enjoys a trade surplus with only one or two countries around the world. Is this fair? We will let you decide…………