Donald Trump made a big announcement today about his plan to force Mexico to pay for the wall. You can see several articles about it, plus links to all sorts of commentary on it, here.
It’s a mouthful. But the gist of the proposal itself is this:
The proposal would jeopardize a stream of cash that many economists say is vital for Mexico’s struggling economy. But the feasibility of Trump’s plan is unclear both legally and politically, and also would test the bounds of a president’s executive powers in seeking to pressure another country.
In the memo, Trump said he would threaten to change a rule under the USA Patriot Act antiterrorism law to cut off a portion of the funds sent to Mexico through money transfers, commonly known as remittances. The threat would be withdrawn if Mexico made “a one-time payment of $5-10 billion” to pay for the border wall, he wrote…
Nearly $25 billion was sent home by Mexicans living abroad in 2015, mostly in the form of money transfers, according to the Mexican central bank. In his memo, Trump said that “the majority of that amount comes from illegal aliens.”
But that figure includes cash from around the world, not just the United States. In addition, a Government Accountability Office report in January said that it is difficult to track how much money illegal Mexican immigrants are sending versus those working legally in the United States…
The memo includes rationales for a number of potential intimidation tactics, including increased trade tariffs, the cancellation of visas, and higher fees for border-crossing cards.
The are constitutional problems inherent in this. There are legal problems inherent in it. There are economic problems and there are international relations problems. And—if this is the sort of thing you care about—there are also human problems.
Then there are problems that are merely ones of execution: will this even have the effect Trump says it will? And last but not least, there is the contradiction inherent in Trump’s saying he will both deport all (or nearly all) of the illegal immigrants in this country and he will simultaneously execute this plan to extract large payments from the Mexican government by threatening the transfer of money that these same illegal immigrants send home to Mexico while working here. I suppose the idea is that he will do this first, and then he’ll deport them all after they’ve served their purpose.
If you read that whole WaPo article—or the other commentary at the memeorandum link I gave—you’ll see that there are many many ways to criticize Trump’s proposal. To do so point by point would be to write something much longer than I’m prepared to do here, so I’ll just say follow the links for that, and let’s just focus on the very very practical. As someone in the comments section of the WaPo article wrote:
OR – Mexicans can remit money via ANY of the world’s other 193 countries. And THEY can remit it to Mexico for a few bucks.
OR – Mexicans can remit money home via Hawala – the ancient, global, trust-based, person-to-person, money transfer system.
OR – a new class of money smugglers can rise up to do it.
Seems reasonable to me. There’s a lot more here:
If the guy who picks tomatoes in the San Joaquin Valley can no longer send money home what will he do? Will he actually stop coming to the US to work? Or will he save the money up and take it home in cash? Or (my favorite) will he decide that the whole migrant worker life has become too uncertain and just bring his whole family to the US for good?
Is targeting wire transfers going to work? What stops an illegal from buying a pre-paid Visa/Mastercard and mailing it home? How about debit cards on US banks? PayPal accounts? Wouldn’t this spawn an unregulated market in moving cash to Mexico?
Is an (more) economically and politically unstable Mexico on our southern border likely to result in more or less illegal immigration? Is a destabilized Mexico a desirable thing from a US national security point of view?
That piece goes on to explain why threatening trade with Mexico would hurt American workers, and this article goes into that issue and others even further. After putting the plan into perspective as part of a Trump “extractive, neo-mercantilist worldview,” the author adds:
…[T]o “make America great again,” [Trump’s] willing to rethink and upend the key components of [US] indispensability: America’s intricate alliances, overseas military bases, and mutual defense pacts, plus the pillars of the post-World War II international system””NATO, the UN, free trade, the global nuclear nonproliferation regime””that the United States helped design…
In an economic model produced for The Washington Post, Moody’s assumed that Trump honored his campaign promises, imposing a 35-percent tariff on imports from Mexico and a 45-percent tariff on imports from China. The model found that if both those countries retaliated with tariffs on U.S. exports, unleashing a trade war, all three countries could fall into recession. American consumers would face higher-priced Mexican and Chinese goods. U.S. companies that sell goods and services to Mexico and China, or are otherwise integrated with the Mexican and Chinese economies, might be forced to lay off workers. The tumult could cause stock markets to plummet and economic growth in Europe to contract. Millions of American jobs could be lost, at least in the short term, while the country’s manufacturing sector scales up to meet the demand for lost imports.
Any of these measures””the remittance regulations, the visa fees, the trade wars””would deal a severe blow to the U.S.-Mexican alliance. The fulfillment of Trump’s related campaign pledges””the renegotiation of NAFTA, the deportation of unauthorized immigrants en masse””would only harden the blow. Coordination between the U.S. and Mexico on intelligence and law-enforcement activities at the border would suffer. America’s commercial ties with its second-largest export market and third-largest trading partner would fray.
As I said, this is just the tip of the iceberg. The submerged part of the iceberg is (at least in part) the instability and unpredictability of a Trump presidency and how it would affect our relations with other countries. A lot of people on the right have been critical of Obama’s foreign policy, but Obama has been a model of predictability compared to loose-cannon Trump, who proposes a re-ordering of America’s position in the world at least as great as the one Obama has tried to effect, if not more so. Here’s one theory about what might happen in a Trump presidency, and it seems rather plausible to me:
After his election, other countries will immediately hedge against the risk of abandonment. There will be massive uncertainty around America’s commitments. Would Trump defend the Baltics? Would he defend the Senkaku Islands [in the East China Sea]? Or Saudi Arabia? Some nations will give in to China, Russia and Iran. Others, like Japan, will push back, perhaps by acquiring nuclear weapons. Trump may well see such uncertainty as a positive. Putting everything in play would give him great leverage. But by undoing the work of Truman and his secretary of state, Dean Acheson, it would be the end of the American era.
[NOTE: Although this isn’t really part of the Mexican issue, it’s related to the bigger picture, and is also worth reading. It’s about Trump’s proposal to eliminate the national debt. I’m no whiz at economics, but I’m beginning to wonder whether Trump has any grounding in macroeconomics as opposed to microeconomics.]



