Despite Trump’s Tariff Threat, Automakers Double Down on Mexican Production

Addicted to cheap labor, Corporate America is not playing along.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

President Trump’s threat of imposing 20% tariffs, or earlier 25% tariffs, on foreign produced cars has failed to dull the allure of Mexico’s maquiladoras for global manufacturers looking to cash in on the country’s cheap labor. Mexican car manufacturers produced a record 1.6 million vehicles in the first five months of 2018, up by 10,000 from the same period of 2017.

Recent data from the Mexican Association of the Automotive Industry (AMIA) show that in May Mexico’s automotive plants produced 3.9% more light vehicles than in the same month last year. Domestic sales were down 8.9% from January to May, but Mexican assemblers continue to work at full capacity thanks to rising demand for exports. In 2017, Mexico produced 3.7 million cars. During the same year the US goods trade deficit with Mexico surged to $71.1 billion, a 10.4% increase ($6.7 billion) over 2016.

And automakers continue to bet on Mexico. On Thursday, GM revealed its new Blazer starting with model year 2019. But this won’t be the rugged truck-based old Blazer that GM killed 14 years ago, but a car-based compact SUV. And it will be made in Mexico.

“GM employs over 15,000 production workers in Mexico, pays the workers less than $3 per hour, and exports over 80 percent of the vehicles to the US to sell here,” UAW vice president Terry Dittes lamented in the statement Thursday night, cited by the Detroit News. “This is all happening while UAW-GM workers here in the US are laid off and unemployed.”

In Mexico, where assembly line workers earn on average around $2.50 per hour compared to $28.70 per hour in the US, fears are rising that Trump may carry through on his threat to impose tariffs on imported cars, SUVs, vans, light trucks and automotive parts. Canada and Mexico are the top two suppliers of vehicles to the US. If these tariffs were to cause a shift in production from plants in those countries to plants in the US, they’d feel the economic pain.

Many analysts expect that the US’ direct neighbors will ultimately be exempt from any new tariffs, as Washington renegotiates the NAFTA trade deal with them. “If we try to read the tea leaves here, there should be a NAFTA deal at some point that will exempt Canada and Mexico from this discussion. But as of now, we just don’t know,” said Jeff Schuster, President, Americas Operation and Global Vehicle Forecasting at LMC Automotive.

President Trump seems intent on undoing some of the key provisions in NAFTA that enabled automakers, both domestic and foreign, to take advantage of a massive pool of cheap Mexican labor. He has proposed changes to NAFTA’s rules of origin for cars, used to determine how much of a vehicle is manufactured at a particular location, but the proposed new standards were rejected by automakers, as well as the governments of Mexico and Canada.

The current Mexican government and global automakers are determined to maintain the cheap manufacturing wages that have underpinned Mexico’s economic model since NAFTA was signed on Jan 1, 1994. But new presidential elections are scheduled for July 1, and the front runner in the race, left-wing nationalist Andres Manuel Lopez Obrador (or AMLO as he’s popularly known), has pledged to bring Mexico’s wages closer in line with those of its NAFTA partners, the US and Canada.

“We need to strengthen the domestic market,” the candidate said at a recent meeting of the American Chamber of Commerce in Mexico. “Trump is proposing to improve the salaries of Mexican workers. In that we agree.”

AMLO described the relationship between Mexico and its northern neighbor as “fundamental” but he argues that it must be based on mutual friendship and cooperation. “With better economic welfare, the migratory pressures and threats to security will subside”.

It makes a lot of sense. Even Mexico’s wealthiest man, Carlos Slim, with whom AMLO has had his share of differences, would seem to agree. “We need to look again at the domestic economy, which for 50 years we prioritized, and it gave us average annual economic growth of 6%. In the last 30 years we have neglected that,” Slim said at a Bloomberg forum in late 2016.

But internal demand on its own will not be enough to insulate Mexico’s economy from the potential fallout of a full-on trade war with its biggest trading partner. Thanks to NAFTA, Mexico has never been so dependent on the US economy, which accounts for over 80% of its exports, around half of its imports and 44% of all its foreign direct investment.

Over 60% of that investment flows into Mexico’s manufacturing industry. Much of it ends up in the automotive sector, Mexico’s biggest export category to the US. In 2017 alone it brought in $84 billion.

Clearly automakers have a lot to lose in the event of an escalating trade war, with Japanese and German automakers expected to be hardest hit since they ship the most cars to the US market in terms of sales value. Volkswagen, the world’s biggest auto manufacturer, might take the biggest hit since 45% of the cars it sells in the US come from international factories.

If Trump decides to impose tariffs on vehicles built in Mexico and Canada, the Canadian government could end up providing direct state aid to affected vehicle manufacturers. After Trump slapped tariffs on Canadian steel and aluminum at the end of May, government ministers promised to support the sectors, and Innovation Minister Navdeep Bains said the same kind of aid could be ready for the auto industry.

“We’re examining all options … our view is that if any such action is taken, we’re going to support our workers,” he said in an interview last week. “The message I would convey to the auto sector workers is — we have your backs.”

Which must be comforting for those companies and their workers, but it’s likely to be costly for Canadian taxpayers. The total bill could run into billions of dollars, depending on the scale of government support for the industry, which provides about 500,000 direct and indirect jobs and contributes around C$80 billion ($60 billion) to the economy a year.

Mexico’s fiscally challenged government may try a similar ploy, albeit on a shoe string. In other words, while the Trump administration rakes in billions from its tariffs and US drivers pay through their nose for new vehicles, taxpayers in Canada and Mexico could end up splashing out billions to soften the financial blow for automotive manufacturers and keep the thousands of jobs they provide in tact, at least for a while longer. By Don Quijones.

By that stage, Mexico, the third largest market for US food exports, may have little choice but to take aim at US farmers. Read: Trade-War Drums: Is Mexico Ready to Fire at the US Corn Belt? 
 

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  47 comments for “Despite Trump’s Tariff Threat, Automakers Double Down on Mexican Production

  1. Jun 23, 2018 at 3:28 pm

    Far too many people blaming Mexico, China, and all of the other low wage countries for the loss of US manufacturing but not one of them came in the night like bandits and thieves stealing American jobs. That was done by our very own scions of Wall Street and it looks a 25% tariff won’t reverse it.. Just pass the cost onto the buyer.

    • Drango
      Jun 23, 2018 at 4:36 pm

      Is there any evidence that imports are cheaper because they are built or assembled in low wage countries? It seems far more likely to me that any cost savings are used to increase profit margins. Trade barriers mean higher prices, or so the theory goes. But a car assembled in Mexico by workers making three dollars an hour still costs about the same as a car built in the U.S. by workers making much more. The only difference is how much profit the car company can pocket. Of course it’s better for car companies, their executives and stockholders to make a bigger profit. But for American workers, it takes away their livelihoods for the benefit of a small segment of the population. David is right. Wall Street is making a fortune selling out American workers, and the status quo is just fine with them. Free trade is a theory for fuzzy minded academics and a sociopathic financial industry, and if the car companies don’t like a Trump taking away their special privileges, then TFB for the car companies.

      • Lars
        Jun 24, 2018 at 9:27 pm

        Let’s not forget that crushing labor unions is a desired goal of upper management. Outsourcing and the threat of more outsourcing is a great deterrent to organized labor in wealthy economies. Wall Street, the C Suite, and our government are all complicit in a race to the bottom. They structure global capitalism to concentrate wealth and power first and foremost.

        • sierra7
          Jun 27, 2018 at 2:40 pm

          And, the “cooperation” of the financial industry offering those heavy burden loans to the unsuspecting to purchase those vehicles. To believe that any “adjustment” to the “$3 hourly pay for Mexican auto industry workers will bring them anywhere within a “Moon’s shot” of the $28.50 that has been earned here in the US is a real fairy tale.
          The crushing of organized labor has been on the corporate burner since the first union was formed way, way back. And, due to the corporate/government spokespeople pushing for “freedom” to work as individuals as part of our parcel of American “liberty” is ghastly.
          Labor has no power except its own bodies; global corporations hold the financial power and the purchased politicians and think tanks that will continue to prevail until the “lower classes” understand that no quarter will be given…..ever…..to organized labor.

    • Petunia
      Jun 23, 2018 at 8:37 pm

      It wasn’t just Wall St. that sold out the American worker. Both houses of congress have been assisting them in killing the middle class. Congress is now dealing with the repercussions the sellout and Wall St. will too.

  2. Perrin Gower
    Jun 23, 2018 at 3:55 pm

    for each Central American transiting Mexico to illegally enter the U S, raise the import duty on Mexican built autos ………………..

    we’re so dumb…………………….

  3. curious cat
    Jun 23, 2018 at 4:04 pm

    A 25% tariff will increase the costs of the Blazer if it is imported from Mexico. If it is made in the US with labor making $28.70 and hour instead of $2.50 will that not also increase it’s cost? The question I have is which arrangement will provide for the lowest cost vehicle? And, also, what does the increase in the cost of foreign products do to the net effect of the tax cut package? Finally, how long will it take the US to ramp up industrial production and how much of that will be automated? Just asking.

    • Suzie Alcatrez
      Jun 23, 2018 at 5:56 pm

      It only takes about 20 man hours for GM to assemble a vehicle. Labor costs are a very small portion of a vehicles total cost.

      • Jun 23, 2018 at 6:44 pm

        Suzie, you’ve fallen into a common, often cited trap that just uses a tiny data point that has been cherry-picked to manipulate people into thinking that cheap labor doesn’t matter. This cherry-picked number, if it is even correct, does NOT include the total manpower in an auto plant.

        Let’s use some basic numbers:

        GM employs “over” 15,000 workers in Mexico, times an hourly wage-difference of $26/hr, times 40 hours per week (assuming no overtime), times 52 weeks per year (assuming paid vacation) = $811 million in just wage savings a year in Mexico, not counting benefits, the cost of contractors, etc. Once you throw cost savings in benefits, contractors, and other items into it, GM’s savings by operating in Mexico are likely well over $1 billion per year.

        • alex in san jose AKA digital Detroit
          Jun 23, 2018 at 7:56 pm

          You guys are all silly; thinking labor and materials dictate price. It’s actually the old law of “what the market will bear”.

          When and I say when not if, we get to the point of only being able to afford East Asian style tuk-tuks, the oligarchs will simply get the laws changed (tuks-tuks are not that dangerous, really, as they spend almost all of their time putting around at less than 20MPH and by then we’ll be in “walkable” population centers) and thus decrease the materials/labor costs (a tuk-tuk is less labor and materials than an SUV) and they’ll still have the proles signing 6-year loans for their new tuk-tuk.

        • Jun 24, 2018 at 2:13 am

          No one was talking about price. This is about costs and profit.

        • Steve clayton
          Jun 24, 2018 at 4:03 am

          Spot on Wolf. You can’t blame GM for saving a billion dollars but on the other hand I would question why after being given a bailout by the US in 2008 they aren’t supporting their country more that supported them.

        • Pavel
          Jun 24, 2018 at 11:23 am

          @Steve Clayton
          IIRC the cost per (US) GM worker’s job saved by the US bailout was a ludicrous amount, perhaps $1M but at least $500,000. Whilst the crony capitalist firms hired to structure the bailout (Blackrock, I think, stuffed with Clinton-era cronies) made out like real bandits.

          They should have allowed GM to go bust and spend the money on creating real, sustainable jobs in a more viable industry.

    • MC01
      Jun 24, 2018 at 6:10 am

      There’s a story we were told back when I was studying TPS (Toyota Production System) about automation.
      There was a US automotive component manufacturing company which was keen to become a Toyota supplier in the 80’s. In the specific they wanted to sell them pre-formed sound dampening material.
      The company owners decided to impress the Toyota folks by “beating them at their own game”, so they hired at great expense an engineering firm to build for one of their factories in Chicago (I think) an andon system more wizzy and hence more effective than the one Toyota uses.
      “Andon” literally refers to the button Toyota assembly plant workers had to push to warn team leaders when they found a quality issue on-station: it was part of their practice of “stop to fix problems, get quality right the first time”. It used to be pretty low tech, like a big button which lit a light over the station where the problem was and a buzz or siren to warn the team leader. Nothing fancy for short.

      Anyway when the would-be vendor invited a Toyota purchase team to their factory their PR people made a lot of their computer-managed andon system but immediately understood something was wrong as their would-be customers seemed absolutely unconvinced.
      After the tour was over, the Toyota team leader told his hosts “It seems you have some problems understanding what andon is. I will try to explain it to you if you have some time”. He then asked for somebody to drive him to the nearest hardware store.
      He came back with a bunch of small colored flags and he gave them to the now very alarmed factory manager saying “andon”.
      His point was that implementing a production system is not the same as buying fancy new technology: or as we were taught, people and processes solve problems and technology supplement and support people.

      Automation is simply amazing. Some of the industrial stuff I am seeing lately was considered science-fiction just two decades ago. Visual arc welding by robots left me without words the first time I saw it and it’s considered nothing too fancy these days. Amazing.
      But as GM and Chrysler learned in the 80’s when they were trying to close the quality gap with Honda and Toyota, you can buy all the most advanced technology in the world and it’s still worth nothing if it’s not used to support people.

    • Anon1970
      Jun 24, 2018 at 12:05 pm

      Before NAFTA and before the Canada-US Auto Pact of 1965, the big four US car makers operated small inefficient assembly plants in three cities in Ontario and one in Quebec. Car prices were much higher in Canada than in the US but the Federal government was willing to trade off higher car prices for more factory jobs in Canada. The car companies were undoubtedly profitable in both countries, as imports from Europe were still small and almost non-existant from Japan. It appears that Trump is willing to accept higher consumer prices in exchange for more jobs in the US. There will be some winners but more losers. But the biggest loser may turn out to be Canada, as it is forced to go back to an economy of high tariffs and high consumer prices.

      • Binky Khodorkhovsky
        Jun 25, 2018 at 3:39 pm

        Trump’s biggest trait is his willingness to go completely random at any time based on no rational impulse.

        We will be driving Ladas and Moskviches soon when Steve Doocy or Sean Hannity say boo. Look, a distraction!

  4. Gian
    Jun 23, 2018 at 4:20 pm

    On the one hand, we have pundits demanding higher wages for virtually everyone and on the other, we have those intent on exporting jobs to 3rd world countries who savage their “employees” with slave wages. The difference in pay for auto workers noted in this article compares only wages. When you factor in workers’ comp and health insurance premiums, FICA, unemployment insurance and the ever present threat of lawsuits for sexual harassment, discrimination and E&O, it only makes sense for mfg’s to keep producing in Mexico and pay a 25% tariff.

    • JB
      Jun 23, 2018 at 8:15 pm

      good point , also these are free trade zones sanctioned by the mexican government . they are not subject to import tariffs.

    • Mike G
      Jun 23, 2018 at 10:40 pm

      If lawsuits for sexual harassment are a major component of a manufacturer’s operating costs, they might want to take a closer look at their management practices.

  5. Jon
    Jun 23, 2018 at 4:33 pm

    A trade agreement helps no one but the elites and rich people

    • VarAway
      Jun 23, 2018 at 4:45 pm

      I thought we were talking about FAIR trade agreements?

      But my question would be…
      How can you make a fair trade agreement when your
      partner pays $ 3 wages versus your labour costs of $ 28
      right NEXT to your country?

      THAT is the real problem!

  6. Fernando
    Jun 23, 2018 at 4:37 pm

    NAFTA destroyed Mexico. The only ones who benefited are the wealthy in Mexico, corporations in the USA, and stockholders…

  7. van_down_by_river
    Jun 23, 2018 at 5:15 pm

    I already own a vehicle, have no need of ever purchasing another. Go ahead and tax imported vehicles 1000%. I don’t care, it would only serve to put us on a more sustainable path. Let Ford build their ugly F150 truck where ever they choose, it will get built regardless.

    Tax imported oil as well, 40% of the oil you consume is imported – I don’t hear anyone clamoring to put a duty on oil. I drive less then 1000 miles per year (vehicle serves primarily as my residence – I mostly travel by bike) so go ahead and tax gas $10+ per gallon.

    Tax consumption not earnings, your priorities are all cocked up.

    BTW up to 80% of the nitrogen in your body came from fertilizers that had to be produced using fossil fuels, but go ahead and piss away valuable resources – who cares what happens to humans after you have passed away, that’s their problem not yours, right. By all means keep driving around, future famine is someone else’ problem. Just the facts – take it or leave it.

    • LessonIsNeverTry
      Jun 24, 2018 at 10:57 am

      Welcome to tragedy of the commons. Since even if US consumers stopped driving for every little errand voluntarily (won’t happen), the rest of the world would want what we once had. Nothing stops over-consumption worldwide except physical constraints. Those constraints could manifest many ways, none of which are pretty. Your self imposed restraint is pointless at stopping what it professes to care so deeply about. You are welcome to this, of course, but kindly stop telling the rest of us how to live.

      • Brian
        Jun 24, 2018 at 3:03 pm

        I did not read Van’s comment as telling anyone how to live. However, since you made an issue with it -Shortly enough you may be paying the true costs of your lazy suburban habits. Some of us prefer to prepare for a what is likely a leaner future, rather than go along with the mass media mirage status quo.

      • elysianfield
        Jun 25, 2018 at 6:35 pm

        ” Nothing stops over-consumption worldwide except physical constraints.”

        Well said.

  8. Kean W. Stimm (KWS)
    Jun 23, 2018 at 5:20 pm

    The reason for tariffs is to achieve trade balance. Currently we have a negative imbalance for manufactured goods of nearly a Trillion dollars per year offset slightly by a positive balance for services. To continue this enormous imbalance is to bring financial chaos. The USA simply cannot afford it because the money is coming from greater and greater debt. Most important, it is manufacturing that creates wealth in the USA, not services.

    The real answer to the problem is by requiring trade balance as being carefully negotiated independently with each of our seven major trading partners. Simply put, the dollar value they purchase from us equals the dollar value we buy from them. Our trading partners can reduce prices and/or buy more from us to achieve balance. It will take a couple of years.

    Rather than tariffs, we simply cut off deliveries to achieve balance. Our trading partners will soon figure out an answer to our mutual benefit. Each partner does what they do best. Everyone wins in the long run without a lot of hard feelings and resentment.

    • Tom Jones
      Jun 25, 2018 at 2:09 pm

      I think so too…

  9. Stan
    Jun 23, 2018 at 7:25 pm

    The savings in labor costs and the resulting increase in profit is even higher on the expensive cars made in Mexico like the Audi Q5.

  10. polecat
    Jun 23, 2018 at 8:10 pm

    Corporate “America” …
    Hahahahahahahah .. Hahahahahahhahahahaha !!

    Corpse Terra perhaps …

  11. Bobber
    Jun 23, 2018 at 11:32 pm

    This is not a battle between countries. This is a battle between workers and global businesses.

  12. BirdBrain
    Jun 23, 2018 at 11:49 pm

    Tired of getting skrewed by GM dealerships on shoddy work performed, I plan on replacing my made-in-America GM with a made-in-America HYUNDAI. I will NEVER return, GM! I will let everyone know WHY I bought “one’dem furrin carz”!

    • Night-Train
      Jun 24, 2018 at 12:56 am

      Thanks for buying your new furrin car made in Alabama. We ‘preciate it.

  13. Realist
    Jun 24, 2018 at 3:21 am

    To oversimplify things somewhat, the only solution to the US trade deficit with the rest of the world is for the US dollar to loose the status as THE reserve currency. As long as the dollar has status as reserve currency, there will be a demand for dollars, thus enabling the USA to run continious deficits and paying for raw materials and goods from outside with freshly printed dollars ( paper or digital ones )

  14. QQQBall
    Jun 24, 2018 at 9:19 am

    Hey GM… look to Mexico for your next bail out, or go pound sand.

  15. Tom
    Jun 24, 2018 at 10:03 am

    No jobs = no money to buy new cars. Perhaps the mex banks can engineer a 39 year mortgage so their populace can buy all the new vehicles produced at home.

  16. Ishkabibble
    Jun 24, 2018 at 10:41 am

    As Mr. Quijones pointed out in late November of 2017, “Mexico” was in already in big trouble before Trump seriously talked about wildly increasing tariffs and even ditching NAFTA altogether:
    https://wolfstreet.com/2017/11/30/inflation-surges-as-economy-bogs-down-in-mexico/

    The fudamental problem is exactly the same now as it was then: economies vitally dependent upon exports. How have those economies developed over the decades?

    Population in Mexico in 1960: 38.17 million people/”consumers”
    Population of Mexico in 2016: 127.5 million people/”consumers”
    Population increase in 56 years: 89.33 million people/”consumers”

    Percent increase of the Mexican population in 56 years:
    127.5 million / 38.17 = 3.29 x 100 = 329%

    Again, Mexico’s “consuming” population has “grown” by 329% in 56 years. (And this does NOT take into account the millions of human beings that have re-located from the area on the planet that humans agree to call “Mexico”, across an imaginary line of demarcation to the area on the planet that humans agree to call “the United States of America”.)

    But there is a “problem” for human beings living in “Mexico”. As DQ (no, not THAT DQ) has put it so well in the aforementioned linked article,
    ===
    “While inflation has surged, economic growth remains sluggish compared with many other countries, including Mexico’s direct neighbor to the north.”
    ===

    What?! ECONOMIC GROWTH REMAINS SLUGGISH in an area of the planet where the human population has grown by 329% in only 56 years!? How can this be?! Luckily, in the linked article we have one explanation from “experts” who live in that area:
    ====
    ““This deceleration is largely explained by a temporary and limited impact from the (recent) natural disasters,” the Finance Ministry said in a statement on Friday, citing the oil, education and tourism industries. Of course, there’s also the unmentioned fact that credit has got a lot more expensive as a result of Banxico’s contractionary monetary policy.” Etcetera, etcetera, etcetera.
    ====

    But just exactly WHY is that 329% increase in the population of human “consumers” living on the area of the earth that humans call “Mexico” not mentioned by the “experts” in the “Finance Ministry”? Might that have at least SOMETHING to do with “Mexican consumers” “problems”?

    Nope, that’s got nothing to do with anything. According to a human being named Alejandro Díaz de León, “who was promoted from deputy governor on Wednesday”, problems are complicated. As DQ speculates, this man ” is well aware that many of the factors spurring inflationary pressure, such as seasonal fuel price rises and expansionary monetary policies in other parts of the globe, are beyond the bank’s control. There’s also the prospect of the Federal Reserve further hiking US interest rates in December, which would heap even more pressure on Mexico’s currency.

    “If that were to happen, Banxico would have little choice but to raise interest rates even further, which would risk further stifling an economy that has struggled to bounce back after back-to-back earthquakes in September. Fears over political instability next year as well as a possible breakdown in NAFTA renegotiations are also dampening investor sentiment.”

    Oh, NOW I understand why the human consumers living on the area of planet earth “we” have agreed to call “Mexico” are suffering a relatively, to put it succinctly, “low standard of living” compared to human consumers living on other demarcated areas of the planet that have different names.

    Quite obviously, the human consumers living on those OTHER areas of the planet MUST BE DOING SOMETHING BETTER than the human consumers living on/inside the area called Mexico. In other words, those consumers living on those other areas must be “following the world-wide, ‘globalized’ economic rules” BETTER than the consumers living within the area that humans have agreed to call Mexico.

    Quite obviously, because there is absolutely nothing wrong with the world-wide economic rules (the rules of an economic system in which the vast majority of wealth and capital is owned by a microscopic percentage of the human population), there must be something wrong with the way that the human consumers living in Mexico are BEHAVING.

    But no, the experts tell us that much of the reason for Mexicans’ low standard of living is “beyond” Mexicans’ control — for example, “seasonal fuel price rises”, “expansionary monetary policies in other parts of the globe” and “there’s also the prospect of the Federal Reserve further hiking US interest rates in December, which would heap even more pressure on Mexico’s currency.”

    The most important question that everyone reading DQ’s great articles should be asking themselves is obvious. Just exactly WHY can’t the relatively low standard of living for the human consumers living on that part of planet earth we have agreed to call “Mexico” NOT be “corrected” by those same human beings to WHATEVER standard of living they desire?

    They can’t because, so far anyway, they have “decided” to fully participate (to assume a well-defined role that is decided upon by an external Elite Group of 30 and their Mexican VIP political slaves) in an economic system that has historically resulted, AND WILL CONTINUE TO RESULT, in a low standard of living, which includes low wages, long working hours, etc. etc. The proof is in the historical pudding.

    Although there is a rich class in Mexico who enjoys its standard of living “on Mexico”, many of the poor human beings would love to pull up stakes, move themselves to the area called “USA” and put down stakes there. They correctly understand that the “standard of living” of human consumers consuming on THAT area of the planet is much better than that of those living on Mexico.

    But unfortunately, those consumers living on Mexico (and Haiti, Cuba, Puerto Rico, Bangladesh, Malaysia, Thailand, Cambodia, Libya, Iraq, Yemen, Afghanistan, etc.) must be literally forced to stay on Mexico (etc.). The “standard of living” of the human consumers living on the USA and other “just lucky” nations depends upon the consumers living on Mexico (etc.) remaining on Mexico (etc.) and, most importantly, continuing to suffer their standard of living.

    To assist the consumers living on Mexico (etc.), the more-globally-experienced (former happy colonialists turned happy “globalists”) consumers living on the “lucky” nations will build physical and political “walls” to keep those human beings exactly where they are, lving the way they are.

    Absolutely ALL of what you hear coming out of CB and TBTF bank heads’ pie holes is gobbledygook very carefully designed to be unintelligible to absolutely everyone, INCLUDING THEMSELVES! So why do they say it? Because saying it maintains in the brains of those listening to it the illusion that what is going on in the world is something OTHER than a simple herd-management operation by an Elite which results in that same Elite and their children remaining the Elite — an Elite that creates our reality.

    The “standard of living” of the human beings living on Mexico (etc.) is THEIRS, and only theirs, to change. THEIR Step 1 is to design (“imagine”) a detailed economic arrangement between themselves that at least conceivably provides them all with a decent standard of living, as whatever they define it.

    Those VIP people who live on areas outside of Mexico, particularly those VIPs who have “investments” in Mexico, including The Group of 30 and their ilk will not only NEVER do that, again, they will do everything in their power, including brute force, to keep the relative standard of the human beings living on Mexico exactly as it is.

  17. Ambrose Bierce
    Jun 24, 2018 at 12:16 pm

    any idea if these tariffs have any impact on the federal deficit?

    • Jun 24, 2018 at 2:06 pm

      Tariffs are a tax on US consumers. So if all that happens is that tariffs are imposed, but no production shifts back to the US, and consumption wouldn’t slow down, tariffs would increase government revenues. But it’s a lot more complex than that because tariffs cause major shifts in the economy, and I think the outcome on the deficit is uncertain.

  18. Fernando
    Jun 24, 2018 at 3:04 pm

    The rich in Mexico don’t care about the average citizen. They don’t pay good wages to their employees, treat them like second class citizens, and don’t give them any chance to move up the economic ladder. Mexico is not a functional country and longer, and the sooner we recognize we are not dealing with a country but a region, the sooner we can start dealing with it adequately. We should invade and reform all of Mexico and while at it, Central America too. It will be good business for our military, create functional democracies in those countries, and provide plenty of cheap housing for millions of older Americans, millenials…I am from central America, and I know US forces would be welcome with open arms, not like in middle East…

    • Jun 24, 2018 at 4:09 pm

      I can’t figure out if you’re being sarcastic or serious. I just HOPE with all my might that you’re being sarcastic.

    • Ishkabibble
      Jun 24, 2018 at 4:30 pm

      Very, very funny! For a moment there, I thought you were being serious!

  19. Ishkabibble
    Jun 24, 2018 at 4:20 pm

    Hey fellow Canadians, imagine that every human being outside of Canadian borders suddenly ceases to exist.

    Imagine that the present system in which the vast majority of wealth and large-scale capital equipment is owned by a microscopic percentage of Canadians remains the same.

    Imagine that both “labor” and “management” can organize, as they supposedly can in our present “democracy”, but now, because nobody is alive outside of Canadian borders, the owners of capital no longer have the option to move their capital equipment to other places on the planet where there are desperately poor people who are “willing” to work for food, water and a place to sleep on the factory floor.

    Imagine that Canadian evironmental, labor, etc. regulations apply everywhere.

    Just exactly HOW are we Canadians going to “go it alone” when Canada’s presently-designed economy needs 300,000 immigrants (of a certain “economic type”) each and every year from now to eternity?

    Who is going to buy all of the “excess” natural resources, oil, farm products, manufactured goods, etc. that a small percentage of working Canadians can very efficiently produce, but can no longer export? Nobody.

    To have available the relatively small amount of warm-weather items that Canada now imports, Canadians will venture forth to those places, AS CANADIANS, and produce and send those products “back home”. Naturally, those Canadian workers working on other parts of the globe will be paid a wage that also applies to the rest of the Canadian “labor market” and, again, the Canadian regulatory framework will also apply to those workers and facilities and places of production, as well as Canada’s social benefits.

    All of the work that is now done in Canada by “temporary foreign workers” (TFW) and other temporary workers who harvest crops, put roofs on houses, cook food in restaurants, take care of the elderly in nursing homes, etc. will have to be done by Canadians who will be paid by other Canadians.

    Automobiles, trucks, TVs, toilet tissue, etc. will now have to be produced by Canadians, for Canadians. Absolutely any thing and any service that Canadians want will have to be produced by Canadians and, yet again, Canadians will have to pay these other Canadians to do that — enough payment so that these hard-working Canadians will make enough “profit” to “save” enough money to be able to “retire” when they inevitably become physically decrepit.

    How much is the above arrangement — again, an arrangement in which only Canadians inhabit the planet, and in which the vast majority of wealth and capital equipment is owned by a truly microscopic percentage of the population of Canada — going to “cost” Canadians? Will Canadians be able to “afford” that system, that arrangement?

    When I recently asked my brother in law why the Canadian government finds it necessary to import vehicles, TVs, etc. from other countries, his reply was that”if they were produced by Canadians in Canada, they would be too expensive”. (This coming from a man who hired a TFW to give additional care to his elderly mother who was ALREADY living in a nursing home).

    So now to my point. Just as it is for Canadians now in our multi-national globalized world, Canadians living in a Canada-only world could NOT “afford” what they need and want under the present economic arrangement in which the vast majority of wealth and large-scale capital equipment is owned/controlled by a microscopic percentage of population for their own astronomical profit.

    THIS is why under the present economic system desperate slave labor is needed to provide what Canadians need.

    THIS is why over 300,000 immigrants of a certain economic status have to be imported into Canada each and every year from here to eternity.

    THIS is why “trade agreements” such as NAFTA between international corporations are needed to exploit the most desperate people on the planet for the greater benefit of a much smaller percentage of the population.

    What Canadians desperately need is an economic system in which ALL CANADIANS, not just a microscopic percentage, own/control large capital equipment COLLECTIVELY, and collectively provide the LABOR (by “divvying up” the necessary labor among ALL citizens) to operate that capital equipment.

    By providing their labor to run THEIR capital equipment, farm THEIR land, take care of THEIR sick and elderly, etc., Canadians will have EARNED the right to comsume all of the goods and services produced by THIER captial equipment. In other words, ALL Canadians enjoy the profit from THEIR capital equipment, not just a tiny percentage of Canadians.

  20. James
    Jun 24, 2018 at 5:00 pm

    Forget about mexico. The chinese are opening a copy cat memory chip factory in their homeland and stealing everything else not nailed down from the USA. I can see in the near future where the chinese don’t back down from selling stolen IP and the USA has to eventually nuke them back to the stone age. This is disturbing and hopefully, trump gets this right.

    • fajensen
      Jun 25, 2018 at 4:43 am

      When you only have one tool and that tool doesn’t work ….. everything starts to look like …. a mess!

    • Ishkabibble
      Jun 25, 2018 at 4:01 pm

      Scott Adams wrote that “there are very few personal problems that cannot be solved through a suitable application of high explosives”. After studying the US’s only-one-option-on-the-table “diplomacy” over the decades, I think that Adams was an adviser to the US government.

      But unfortunately for the US, the “problems” of competitors China and Russia, and perhaps other nuclear-armed, likely-soon-to-be-former US allies, are in the “very few” category, at least as far as the eventually-nuking-them-back-to-the-stone-age option goes.

      What’s more likely to happen is that the Elite in the Big Three are going to sit down together in perfect secrecy and develop a Great Big Plan to exploit the rest of the world for the Big Three’s own benefit. In other words, the Uni-polar world of US hegemony is going to soon morph into a Tri-polar world in which the populations of the Big Three will be allowed to have a decent standard of living, but the rest of the people of the world are going to suffer an even worse standard of living than they have now.

      Average Canadians, like average Mexicans, are going to have to tighten their belts so that the average people of the Big Three can loosen theirs. In the future, Trump or his replacement may find the best option for Keeping America Great (KAG) would be to build a wall on the NORTHERN border of the US.

      How the average people of Greece are going to tighten belts that already have no remaining holes is a big mystery, but the Big Three will no doubt help these countries’ governments figure out how to force their citizens to live on even less. Gaza might provide a good example on how to do that, or perhaps the movie “Elysium”.
      https://www.youtube.com/watch?v=oIBtePb-dGY

  21. Prairies
    Jun 26, 2018 at 10:22 am

    I know Mexico is always the big target but how about losing jobs to all the other areas hit with high tariffs. I only mention this because I saw last night that Harley is moving some jobs to Europe to avoid the tariff on American made vehicles. To see Harley Davidson make such a move is the biggest lightning rod out there. It doesn’t get more ‘Merican than Harley and even they can’t settle as just American.

    Add tariffs to a globalized market place, the world alliances might shift when this President is done.

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