Showdown With Mexico, Peso Crushed After President Pulls Out of Trump Meet

20% IMPORT TAX?

trump

Mexico’s President Pena Nieto cancelled his trip to Washington on Thursday  after declaring abruptly that Mexico will never pay for Trump’s Wall.

This is not the first time when we hear that unfortunate choice of words with regard to Donald Trump, and I am talking about the “he will never…[insert random Trump promise here]”.

Getting back to our news story, after Nieto called off his trip to DC, Donald Trump’s press secretary Sean Spicer said that the wall at the southern border will be funded by Mexico, totally, via a 20% tariff on goods from the respective country.

Spicer was not able to provide specific details about how this scheme will be actually put into practice, but later he said that the tax idea may be part of a broader plan with regard to import taxes.

Mexico’s President Pena Nieto has been scheduled to have a bilateral meeting with Donald Trump on Thursday to talk about various hot issues, like immigration policy, drug war cooperation and trade.

With Trump signing the infamous “Build the Wall”executive order on Wednesday, President Pena came under strong political pressure at home and after Donald Trump tweeted Thursday morning that it would be advisable to cancel the upcoming meeting if Mexico doesn’t want to pay for the barrier, well, he did.

Bottom line, things got more complicated in Mexican-US relations today, after Nieto cancelled a planned summit. The United States has a 60 billion dollars trade deficit with Mexico and until now, it has been a one sided deal since NAFTA came into place, leading to massive job loss for Americans and companies off-shored south of the border.

With NAFTA being renegotiated as soon as possible, Mexico will be put in a terrible position if it continues to fight The Donald’s policies and in the end, Nieto should bite the bullet and pay for that wall after all.

The Peso got smacked today at the news that Mexico’s President cancelled his meeting with Donald Trump and to make things more dramatic, the “has been” Vicente Fox said that the US President’s speech in front of the Republicans in Philly reminded him of Hitler addressing the Nazi Party.

Well done Fox, you’ve just done your country a big favor. Eighty percent of Mexico’s 400 bn annual exports are going to the US thanks to NAFTA and a trade war would annihilate the Mexican economy.

Source: CNBC

Photo Credit Doug Mills/The New York Times