Tariffs on Mexico will harm Texas’ economy. Boost trade with Central America instead

Oct. 13, Jared Schroeder, J-School, in Austin American-Statesman for https://www.statesman.com/opinion/Austin American-Statesman/commentary-maybe-bots-are-bad-guys—but-first-convince-courts

What happens in California doesn’t always stay in California, and that’s why Texans tracking the disruption of bots and other non-humans ought to be concerned that California Gov. Jerry Brown signed a law last week that criminalizes using unlabeled bots for political gain. The law is also almost certainly unconstitutional. Yes, the law addresses a problem regarding the influence of AI (artificial intelligence) actors and the misleading information they often carry. Yes, the law is worded to avoid halting all AI expression; it merely requires that AI disclose that they are bots.

By Raymond Robertson

On May 30, President Donald Trump invoked the 1977 International Emergency Economic Powers Act to impose new tariffs on all U.S. imports from Mexico starting next Monday. This action is meant to persuade Mexico to reduce the number of immigrants reaching the Texas-Mexico border.

To many, the recent increase in migration is a crisis. More than 460,000 unauthorized immigrants have been apprehended on the southern border since October, surpassing the previous fiscal year’s total of 396,579.

Most people don’t realize, however, that the current immigration flows are low relative to historic standards. The border patrol apprehended 1,643,679 would-be migrants in 2000, and the number has been falling since then, according the Department of Homeland Security.

What’s more, the new migrants are different from those coming in historically:

  The current migrants are not Mexican, they are Central American, mainly from El Salvador, Honduras and Guatemala.

  These immigrants are not trying to enter the country for work. Most are families seeking asylum due to economic adversity and widespread violence. According to the United Nations, El Salvador and Honduras have the two highest homicide rates in the world (Venezuela is third).

If there is a crisis we should worry about, it is in Central America, not on our Mexican border.

We have a bureaucratic structure in place to handle refugees, but it is underfunded relative to the current surge of refugees. Recognizing the changes in the types of migrants would allow us to allocate resources to address the concerns about the influx of refugees with established systems and potentially keep families together. The current policies split families and put children at risk.

Instead, the current approach is to use tariffs. Using tariffs to force a foreign country to achieve nontrade objectives is self-defeating. Tariffs may have as much of a negative effect on the U.S. economy — both as consumers and producers — as it would on Mexico.

Recent estimates suggest that as much as 30 percent of the value of U.S. imports from Mexico directly use U.S. parts. For example, Mexico assembles automobile dashboards from U.S. components that are then exported back to the United States for assembly into automobiles. Mexico uses more U.S. inputs than it does for any other country.

Tariffs, which are taxes on imports, reduce the demand for U.S. exports, and that costs U.S. jobs. That’s because the U.S. and Texas economies are deeply intertwined. Recent research at Southern Methodist University’s Texas-Mexico Center shows that the degree of integration is extremely high and that raising tariffs on Mexico hurts us. This is why there is bipartisan support throughout Texas to resist these tariffs.

Tariffs, especially those on Mexico, hurt us as consumers. They are just like a sales tax that we pay when we go shopping. Imports are what we get when we shop in Mexico. So, raising tariffs is the same as raising the sales tax. Higher tariffs mean that we, as consumers, will pay higher prices.

If, as a tactic, we import less from Mexico (which is what happens when tariffs rise), incomes may fall in Mexico. But what do Mexicans do with their income? They buy from Texas and the United States. The attempt to hurt Mexicans with this tariff ends up hurting us.

A better policy might be to have more trade, not less. Fostering trade and economic opportunity in Central America has the potential to create jobs in both the U.S. and Central America, much like U.S.-Mexican trade creates jobs in Texas. More jobs in Central America means more opportunity and less migration, and a more effective way to solve the current crisis.

Robertson is a senior research fellow at the SMU Mission Foods Texas-Mexico Center and chair in economics and government at the Bush School of Government and Public Service at Texas A&M University.

 

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