I’m really concerned about a key part of my budget as a non corporately employed individual: all of it. Trump has been throwing a hissy fit on Twitter lately with the President of Mexico. Maybe you’ve seen it. If you’re a supporter of Trump’s trade and immigration proposals, you should know that it could very well result in soaring prices for consumers.
Any Trade War Could Be a Disaster
Trump suggested imposing a 20% tariff on Mexico to pay for his border wall. Great idea right? That means Mexico is going to pay for the wall!
Of course not. American consumers will pay for the wall. When Mexico brings in low cost goods, we get lower prices. When Mexico exports cars, clothes, furniture, fresh produce, and more, that means we get lower prices. Look at where things you buy come from. A huge percent of it comes from Mexico.
The other large portion comes from China. Trump has also suggested imposing tariffs on Chinese goods. If he followed through with both of these proposals, I could easily see a scenario where we’re all going to pay 50% more on everything we buy here in America.
Trump Wants Me to Pay Outrageous Prices to Support Jobs that Shouldn’t Exist
Sometimes it makes a ton of sense to buy an American good or service. Flying in an American Boeing plane, receiving care from an American trained brain surgeon for a rare disease, and eating American almonds makes rational sense.
However, why would you pay $80 for jeans made in America when you could pay $20 for jeans made in Mexico? Should I feel sympathy for the worker in Indiana who lost his $25 an hour job and support his wage by buying American products no matter what?
Of course not. That worker benefits from buying thousands of goods not made in America too. If we became a protectionist country, then eventually everyone is worse off because all we did was decrease our economic growth.
We’re better off as a society from trade and globalization. Propping up a failing Carrier AC plant might be good politics, but its awful economics. These jobs will go away from global competition or automation eventually anyway. Why delay the inevitable? Why impose additional costs on millions of people so we save 1,000 jobs that would’ve ceased to exist in 10 years anyway?
Restricting Immigration is Also a Terrible Idea
When I was a freshman in high school, Hurricane Ivan came through my hometown and wrecked the place. Thousands of homes were damaged, and we needed a massive influx of labor to help fix the devastation.
You know who showed up en masse? Mexican workers, most of whom were probably not there legally. I didn’t hear many people getting upset when 90% of the laborers on their roofs were speaking Spanish and repairing their houses. Why? It’s because without this cheap and hard working source of labor, the cost of roof replacement could be in the tens of thousands. Contractors used Mexican laborers to make more profits yes, but they also delivered their service for a lower price.
Undocumented immigrants care for children, cut grass, harvest crops, clean houses, care for the elderly, build houses, and more. If you scare all these folks away and prevent the entry of new immigrants into America, the prices for all these services will skyrocket.
If You Like Low Prices, then Trump is Really Going to Hurt You
The 10 year treasury bond has risen almost 1% since the summer. The reason? Trump has scared bond investors with talk of trillion dollar infrastructure spending and runaway deficits. Folks are expecting inflation now in a way that they never have in the past 8 years under Obama.
So if Trump renegotiates Nafta and imposes border taxes and other tariffs, Walmart is going to turn into “Low Prices. Almost Never.” When he slows down or even halts immigration, cost for services will soar. Thanks Trump.
Trump is not a friend to those seeking to live a lifestyle of self reliance and financial independence. The workers he’s protecting with his nationalist laws are receiving economic welfare, they just might not feel like it.
Am I being too harsh? Are you scared about the economics prospects of a Trump presidency? Do you buy American? Why or why not?