‘Mexico’s economy utterly depends on its US exports’.

I haven't checked it, but I'll assume that true for now.

So the next question after your bottom line is: Will USians, pay more for those imports from Mexico after a tariff makes them more expensive? My guess is that they will. We are addicted to cheap crap whether it comes from China, Mexico, or wherever.

Maybe we'll buy a bit less. (I'm still a believer in Microeconomics, so adding a tariff should reduce the volume of goods sold by a bit.) That would cut into Mexico's exports and also make the goods more expensive in the US. But Americans would still be paying some part (probably a not insignificant part) of the tariff, because we'd keep buying the stuff even if it costs more.

So Mexico is worse off because they sell a bit less. And the US is worse off because we pay more for fewer goods. It's the perfect lose-lose scenario.

--Peter

US Policy FAQ

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