President Donald Trump’s administration announced the date that Mexico and Canada will be subject to 25% tariffs on the majority of goods entering the country after much dithering. On February 4, T-Day will be observed when some retaliatory measures against its neighbors will also be in effect.
Americans are now anticipating higher import product prices. There is a tendency to underestimate the impact of the tariffs because the US media has so far focused primarily on cutesy examples like tequila, avocados, and beer. However, American households will unavoidably face severe consequences beyond just getting enough food and alcohol.
Indeed, it is disastrous to impose tariffs in a region with such a high level of interdependence of trade. Let us take the case of US-Mexico relations. With more than $1.2 million in goods passing across Mexico’s shared border every minute, Mexico is the country’s largest commercial partner. Mexico’s economic significance is constantly underappreciated because the country is constantly being portrayed by the American public as a lacked talent for narcotics. In fact, this image was exactly what Trump needed to invoke the tariffs’ emergency powers.
The US president couldn’t be more wrong when he says the US doesn’t need Mexico. He is so mistaken that by implementing the tariffs, he will not only cause inflation, as Americans will be more likely to pay for goods that the US doesn’t produce, but he will also undermine the very industries he wants to protect. Whatever retaliatory measures the Mexican government decides to implement will only worsen the situation for US consumers and various industries.
Even some of the products, such as beer, are examples of how disruptive this irrational move will be, despite the superficial analyses of the US media. Mexico is a big producer and exporter of beer, but to maintain this industry, it buys 75 percent of US barley exports. US barley producers will inevitably suffer if Mexico’s beer production is halted due to lower demand from its biggest buyer, the US. The situation applies to countless other products that rely on international imports.
A Trump supporter might rebut: “Suck it up and drink American. Disrupted supply chains will recover”. Although this is easier said than done, Americans would still be in a terrible position if everything were to be relocated to the US.
Take the North American auto industry. As each nation gradually increases its value to each car and truck, the spread of the region is increased by the US-Mexico-Canada Trade Agreement (USMCA), which has increased traffic to and from the US and Mexico. According to Trumpian logic, automakers will be forced to re-importe all of their products to the US and retain all of their profits.
It won’t happen, and this is why.
In this industry, high-skilled but low-paid jobs that have proven stubbornly difficult to automate are often done in Mexico. No skilled worker in the US or Canada would ever accept the wages Mexicans are willing to accept, and these workers add important components to the production of a vehicle. The end result is a car that is both affordable and well-paying elsewhere.
The US is the fifth-largest auto exporter in the world, and its top customers are Mexico and Canada, thanks to this system. The Mexican government can only maintain it thanks to skilled Mexican workers, who can keep the cost low. Short of banning all car imports, China and other established, efficient car-making countries could easily undercut Made-in-America vehicles, even with hefty tariffs.
In a tragic twist of fate given Trump’s widespread deportations, it is also worth noting that businesses would be encouraged to employ undocumented labor to avoid minimum wages and lower prices, just as the agricultural and construction industries already do.
Ultimately, Trump is right about one thing. One side has been subsidizing the other when it comes to trade in North America. But it hasn’t been the US subsidising Mexico or Canada, as he says. The US, its businesses, and its consumers have been subsidized by Mexican workers.
There is still a way to make this right.
Mexico has been working to strengthen the entire North American supply chain while Trump and US economic nationalists accuse Mexicans of “stealing” their industrial jobs in response to US workers’ real concerns about companies cutting Mexican wages. The Mexican government has achieved this by doubling the minimum wage and implementing measures to improve union relations while lowering labor costs.
Transnational collaboration between unions in the US and Mexico is the best way to advance workers’ rights on both sides of the border if American workers truly want to protect their jobs without falling victim to Trump’s xenophobic rhetoric. The review of USMCA in 2026 would be the perfect venue to have this conversation. However, workers will have to take the initiative on their own if the trade agreement does not last that long.
Source: Aljazeera
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