Someone should gift Donald Trump a copy of Dale Carnegie’s How To Win Friends And Influence People. Because right now the new US President is doing the opposite to what his late countryman’s classic book recommended. Last week the new US Commander-in-Chief irritated an entire continent when pulling out of the long negotiated Pacific Trade deal with China, Japan, Australia and others. Now, to honour a crazy campaign promise, he is determined to alienate 122 million Mexicans by spending billions of dollars on a concrete wall reminiscent of the Iron Curtain of communist Eastern Europe. For good measure, Trump also intends making Mexico pay for the white elephant by imposing a 20% import duty on all goods supplied into the US by its southern neighbour. Mexican GDP per capita is less than a third of the US’s. So while Trump’s proposed wall will surely stop them walking across the border, it won’t address the reason why they want to migrate north. Every month thousands of Cubans tackle 140km of water to get into America. What’s to stop Mexican job seekers taking to the sea? Come on Donald. It’s always a bad idea to bet against human ingenuity. – Alec Hogg
By
(Bloomberg) — The Trump administration floated a 20 percent tax on imports from Mexico to pay for a wall along the southern U.S. border, a plan revealed hours after Mexican President Enrique Pena Nieto canceled his first meeting with the new U.S. leader.
The idea of a border tax was first proposed by White House Press Secretary Sean Spicer to reporters on board Air Force One as Trump returned from a congressional Republican retreat in Philadelphia. Later in the day, Spicer amended his remarks in a meeting with reporters in his office.
“When you look at the plan that’s taking shape now, using comprehensive tax reform as a means to tax imports from countries that we have a trade deficit from, like Mexico, if you tax that $50 billion at 20 percent of imports,” Spicer said on the president’s plane. “By doing that we can do $10 billion a year and easily pay for the wall just through that mechanism alone.”
Spicer didn’t explain how such a tax would work or how it would affect U.S. consumers and companies. Asked if the tax could be applied to other countries, Spicer said the administration is “focused on Mexico right now.”
Later, Spicer summoned reporters to his office and said the tax was only “one solution” to pay for the wall and might be applied at a lower rate. He said its economic impact would have to be examined.
The comments nonetheless suggested the White House is moving toward a “border adjusted” tax plan on companies’ domestic sales and imports that is favoured by House Republicans as a replacement for the current U.S. corporate tax. House Ways and Means Chairman Kevin Brady, a Texas Republican and backer of the approach, called Spicer’s comments “very encouraging news.”
Sean Spicer just announced Trump admin will seek a 20 percent tax on Trump suits, which are made in Mexico, to pay for border wall pic.twitter.com/JlykJGQ0jZ
— Adam Blickstein (@AdamBlickstein) January 26, 2017
Spicer’s remarks were part of a conflict between Trump and Mexico that escalated over a 24-hour period after the U.S. president signed a directive Wednesday to initiate the process of building the border wall. Trump’s border plan rapidly exploded into a showdown that threatens one of the world’s biggest bilateral trading relationships.
The cross-border sparring prompted a drop in the Mexican peso, which fell 0.7 percent to trade at 21.21 per U.S. dollar following Pena Nieto’s announcement. Mexico’s currency has plunged almost 14 percent since Trump’s election on concern that Trump will renegotiate or scrap the North American Free Trade Agreement.
After Pena Nieto said in an address Wednesday that his country would refuse to pay for a barrier on the U.S. southern border, Trump blasted him with a tweet Thursday morning. “If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting,” Trump wrote.
of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.
— Donald J. Trump (@realDonaldTrump) January 26, 2017
Pena Nieto, who was to meet with Trump Jan. 31, responded a few hours later with his own tweet: “This morning we’ve informed the White House that I won’t attend the working meeting scheduled for next Tuesday with @Potus.”
Esta mañana hemos informado a la Casa Blanca que no asistiré a la reunión de trabajo programada para el próximo martes con el @POTUS.
— Enrique Peña Nieto (@EPN) January 26, 2017
Higher Prices
The border tax Trump floated wouldn’t be imposed directly on Mexico but instead added to the cost of products as they crossed the border. That would translate to either lower profits for companies that import goods such as Ford Motor Co., Wal-Mart Stores Inc. and Target Corp. or higher prices for U.S. consumers who buy the products.
“Mexico doesn’t pay for the wall,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities. “American consumers who shop at places that import, like Wal-mart and Target, pay for the wall, making it a regressive tax supporting a dumb, wasteful idea.”
The National Retail Federation condemned the plan hours after it surfaced.
“Americans are already paying billions of dollars in tariffs and this is just going to result in one more price increase,” David French, senior vice president of the trade group, said in an e-mailed statement.
Republican Senator Lindsey Graham of South Carolina offered his own light-hearted criticism on Twitter.
“Border security yes, tariffs no. Mexico is 3rd largest trading partner. Any tariff we can levy they can levy. Huge barrier to econ growth,” Graham tweeted. “Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad.”
And Senator Ben Sasse, a Nebraska Republican who opposed Trump’s election, tweeted simply: “Tariffs are a tax on American families.”
Tax Overhaul
A border adjustment tax would radically remake the U.S. corporate tax system. House Republicans’ plan would apply a 20 percent tax rate to companies’ domestic sales while exempting their exports. Under the plan – which would apply to all countries, not just Mexico – businesses could no longer deduct the cost of imports they use or sell. The plan would generate roughly $1.1 trillion in revenue over a decade, according to an analysis by the conservative Tax Foundation.
Brendan Buck, a spokesman for House Speaker Paul Ryan, said that Spicer was describing the Republicans’ tax plan.
Currently, the U.S. taxes its corporations’ worldwide income at a 35 percent rate – though they can use foreign tax credits to reduce that amount, and companies don’t have to pay any U.S. tax on overseas income until they bring it to the U.S.
House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell both suggested Thursday that, after months of studiously ignoring the border wall proposal, they’re now ready to act on the barrier as part of a spending request they expect from Trump that would help jump-start construction.
The two congressional leaders said they’re ready to spend as much as $15 billion from the federal treasury to build the wall.
Trump Promises
Trump won office with two central campaign promises: construction of a wall along the 1,989-mile border, at Mexico’s expense, to halt illegal immigration and an end to the decline of U.S. manufacturing jobs.
Also at issue is the Nafta accord among the U.S., Mexico and Canada. The U.S. and Mexico traded $531 billion in goods and services in 2015, almost five times the trade between the U.S. and U.K. Mexico is the third-largest trading partner with the U.S., following China and Canada, and it sends close to 80 percent of its goods to its northern neighbour.
Mexico’s Foreign Minister Luis Videgaray and Economy Minister Ildefonso Guajardo have been in Washington since Tuesday meeting with Trump administration officials to discuss the agreement.
“Negotiations are paralysed,” said Jose Antonio Crespo, a political analyst at the Centre for Economic Research and Teaching in Mexico City. “It’s clear that Trump made this decision, because he imposed conditions that are unacceptable.”
Trump’s Wall will also boost Global Warming
By
(Bloomberg) – President Donald Trump’s plan for a southern border wall will cost billions of dollars and has already sparked a diplomatic rift with Mexico. It’s also going to be bad for the planet.
Concrete is a potent source of greenhouses gas, and Trump’s “great wall” will need a lot of it – more than double the amount in Hoover Dam, according to engineers at New York University and University College London.
A 1,000-mile (1,600-kilometer) wall would require an estimated 275 million cubic feet of concrete. It would release as much as 1.9 million metric tons of carbon dioxide into the atmosphere, according to Christoph Meinrenken, an associate research scientist at Columbia University’s Earth Institute. That’s more than the annual emissions from every home in Pittsburgh.
“The carbon footprint of a wall that size would be huge,” Dan Millis, borderlands program coordinator for the Sierra Club’s Arizona chapter, said in an interview.
A friend asks: "Isn't there an economist in the White House? The 20% tax means that US consumers will pay for The Wall, not Mexico."
— Salil Tripathi (@saliltripathi) January 27, 2017
Trump’s executive order to build the wall comes as nations around the globe push to reduce greenhouse gases and meet goals set under the Paris Climate accord. Last year was the hottest on the record, with temperatures inching ever loser to the level scientists say would be catastrophic, according to the United Nations.
‘Not Building Walls’
The U.S. needs to invest in infrastructure and many worthwhile projects will require concrete, said Rachel Cleetus, lead economist and climate policy manager at the Union of Concerned Scientists. But those projects should be in line with the broader goal of fighting global warming.
“Let’s talk about modernising electric grids – not building walls,’’ Cleetus said in an interview.
Most of the carbon dioxide from concrete comes from its main ingredient: cement. The cement industry accounts for about 5 percent of global carbon dioxide emissions, according to the Earth Institute. That’s in part because it’s made by heating limestone, a process that releases carbon, and also because it requires the equivalent of about 400 pounds (181 kilograms) of coal to crank out a single ton of cement.
To be clear, these emissions figures are estimates. Trump hasn’t issued precise specifications for the wall, saying on various occasions it would cover about 1,000 miles and be anywhere from 35 feet to 50 feet tall. The estimates compiled by Bloomberg assume a steel-reinforced wall, 1,000 miles long, 35 feet tall and 18 inches thick, producing 1.2 million to 1.9 million tons of carbon dioxide.
The carbon footprint will also vary depending on the quality and composition of concrete. And Trump could always skip concrete and opt for a fence, as Republican leaders have suggested.
Other Options
There are also environmentally friendly options. Carbicrete, a Montreal-based clean technology company, developed a type of concrete that absorbs carbon dioxide. Using Carbicrete cinder blocks to build the wall would potentially remove 1.2 million metric tons from the atmosphere, at comparable prices, chief executive Chris Stern said in an interview.
The Sierra Club’s Millis said carbon dioxide would hardly be the wall’s only environmental impact. It would also cause flooding and cut off migratory paths for endangered jaguars, ocelots and other creatures, he said. And the barrier would do little to stop immigrants.
“People have already traveled hundreds, if not thousands, of miles by the time they get to to the border,” he said. “They are not going to look at a wall and turn around. They are going to go find a ladder or a rope.”
