"He doesn't really know the difference."

T

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Well-Known Member
Trump’s Mexico Deal Reveals Another Deficit

It never fails to amaze how little President Donald Trump, that lifelong businessman, understands about business. The most recent example took place in the Oval Office late Monday morning after his televised phone call with Mexican President Enrique Pena Nieto. The two men were congratulating each other for reaching an agreement on a trade deal that is meant to eventually replace the North American Free Trade Agreement.

Canada, of course, is also part of Nafta, but while Pena Nieto stressed the importance of getting Canada on board, Trump seemed indifferent. "We'll see if Canada can be part of the deal," he said...
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"I think the easiest thing is to tariff their cars," said the president of the United States.

Tariff their cars? Do you know which cars are made in Canada? The Chevy Impala, for one. Also the Dodge Charger, the Ford Edge and 11 other American-brand automobiles. Thus if Trump were to impose a tariff on "Canadian cars," he would actually be hurting Ford, General Motors and Chrysler and the autoworkers he claims to be trying to help.
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What Trump also fails to understand is that the tariff ultimately paid by the buyer of the item. So, if Trump applies tariffs to the Chevy Impala, the price of a Chevy Impala in the US will go up.
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Nafta's fundamental purpose was to reduce or eliminate tariffs between Canada, Mexico and the U.S., with the exception of some politically sensitive carve-outs like Canadian dairy and poultry. One result was that the three economies became deeply integrated, as companies created new supply chains that crossed borders. If you go to south Texas, for instance, you'll see companies with factories on both sides of the border, as parts and supplies move back and forth between them.

Another thing it did was create unheard-of prosperity in Mexico — and as people got decent jobs they lost their incentive to immigrate to the U.S., something you might think would make Trump happy. Indeed, in recent years more Mexicans have returned home from the U.S. than have immigrated to the U.S.
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The above are some of the basic concepts of trade...everyone benefits.

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As I write this, few solid details of the U.S.-Mexico agreement have emerged. It appears that a certain percentage of vehicles must be built in factories that pay workers at least $16 an hour — double the current rate in Mexico. But what that percentage is, and whether it will meaningfully change anything, is unclear.

One of Trump's demands was that the new Nafta include a five-year sunset provision, but that's either been eliminated or so watered down as to be meaningless. The percentage of North American content in an auto to get duty-free status has been raised from 62.5 percent to 75 percent. But again, there are rumblings that the way that content is counted has been changed, so it is hard to know the significance of that modification.

Reading between the lines, I get the sense Mexico's negotiators took a page from any number of smart people who have dealt with the president: If you're willing to allow him to declare victory, you don’t have to give up much, if anything. He doesn't really know the difference...
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"He doesn't really know the difference."

Stated another way: Trump is inept. Trump is incompetent. Trump is unfit for office.
 
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