Wall Street Journal trashes Trump’s new tariffs on Mexico

Trump

President Donald Trump drew a severe rebuke from the Wall Street Journal editorial board on Friday for slapping tariffs against Mexico over a political dispute over immigration, warning Senate Republicans that they risk losing the majority in 2020 if they fail to intervene.

Trump announced a 5 percent tariff on all goods coming from Mexico starting on June 10th, which would increase over time. Trump expects Mexico to stop all immigration and drug smuggling to the United States as part of his obsession with persecuting refugees from Central America seeking asylum.

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The problem is that the tariff will hurt the American economy more because American businesses will be paying the tax, not Mexico. And the added cost will be passed on to consumers through higher prices. The move will also disrupt trade and supply chains.

In response to Trump’s actions, the Wall Street Journal denounced the tariff.

“The biggest economic risk of a Donald Trump Presidency has always been that his trade obsessions would swamp the benefits of tax reform and deregulation,” the editorial board wrote. “For two years he has kept his worst protectionist impulses mostly in check, but as he seeks a second term we are now seeing Tariff Man unchained. Where he stops nobody knows, which is bad for the economy and perhaps his own re-election.”

“The first problem here is that Mr. Trump is blaming Mexico for a mess it can’t solve,” the editorial continued. “The real cause of the recent border chaos is the lure of U.S. asylum policy. Migrants from Central America know that if they cross the border illegally with children they can’t be detained for more than 20 days. The Mexico tariffs also heighten economic uncertainty because they aren’t even about trade. The risk is that Mr. Trump has come to view tariffs as a blunt-force tool to achieve any diplomatic goal. They are Mr. Trump’s magic elixir that will solve any political ailment. No supply chain is safe from Tariff Man.”

The Wall Street Journal went on to posit that Trump could just be bluffing, but warned Senate Republicans that if Trump goes through with the tariff they will have to step in or be ousted from the majority and even the White House in 2020 because of a worsening economy.

“The best scenario is that this tariff threat is Mr. Trump’s familiar bluster in which he threatens chaos to get attention and then backs down,” the editorial board concluded. “But then Tariff Man is impulsive and often his own worst enemy. Equities have fallen for six straight weeks and corporate profits are down. The job market is strong, but that isn’t guaranteed if investment starts to lag. Senate Republicans need to get off their sedan chairs and send this President a message on trade, or they may be in the minority in 2021.”

So far, Senate Republicans have been reluctant to meaningfully challenge Trump, but this tariff could be the final straw. However, that’s assuming any of them have a spine.

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