What a week! Canada, Mexico, and the EU all react with retaliatory tariffs. The EU in particular zeroes in on Harley Davidson motorcycles in Paul Ryan's Wisconsin and Bourbon in Mitch McConnell's Kentucky.
Talks have been taking “longer than we had hoped,” Commerce Secretary Wilbur Ross said as he announced the tariffs on NAFTA partners.
US Move Jolts Talks Over NAFTA, 6/1/18.
What a week! Canada, Mexico, and the EU all react with retaliatory tariffs. The EU in particular zeroes in on Harley Davidson motorcycles in Paul Ryan’s Wisconsin and Bourbon in Mitch McConnell’s Kentucky. Apparently only President Trump and Commerce Secretary Ross are surprised. This is precisely what everyone writing about an ‘easy to win trade wars’ has predicted.
Elsewhere, Spain dumps its Prime Minister in a no confidence vote. Short dated Italian bonds, normally viewed as cash equivalents, plunge in value. Stock exchanges in Turkey and Mexico are weakening. US Stock Markets alternately lurched up and down the last three days. As predicted oil prices slid about six dollars. Like the stock market, talks with North Korea have been off and on all week. .
Trump/Ross have naively proceeded as though other countries would have no other choices in response to their on again, off again tariff threats. In fact American consumers of steel and aluminum have ramped up buying, fearful of a supply shortage. This has increased prices for both steel and aluminum. And manufacturers are reporting the inability to raise retail prices fast enough in response.
Actually it is amazing that US stock prices are still in the 23,300-25,500 recent range of trading. Berkshire Hathaway has given back one-half of its one year gain. The jobs report Friday is solid with over 200,000 new jobs created, though I don’t put a lot of confidence in such reports.
There is no lack of reporting on this unfolding trade war. This column as warned of the dangers of retaliation for months. So rather than report on what readers can find elsewhere, how about speculating on the Art of the Deal from the viewpoint of Mexico and Canada?
Trump seems to favor an outlandish statement on whatever deal he is working, followed two weeks later by an olive branch offering to back off, and then a series of on and off comments seemingly framed to keep the other party confused.
Mexico will shortly elect a new President The front runner is claiming a "Mexico First" Trump like stance. Mexico has recently invited US Eagle Ford Shale Producers to help extract oil in that same formation extending into Mexico. What if the newly elected Mexican President invited China to help produce that energy? Then Mexico withdraws the offer to Americans to participate.
Et tu Wilbur Ross, would you really want China literally in our back yard? How would that be for re-negotiating NAFTA?
Dennis Elam is a professor at Texas A&M San Antonio and may be reached via email at email@example.com.