President Trump has now come up with a plan to make Mexico pay for his
much-ballyhooed wall along the U.S.-Mexico border. One big problem, however,
is that his plan doesnt make Mexico pay for the wall. Instead, it makes
Americans pay for his wall.
Trumps proposal is to impose a 20 percent tariff on goods imported from
Mexico. In Trumps mind, that would mean that Mexicans are paying for his wall
because the tax will be on items that are being produced in Mexico.
In actuality though, the tariff is just like a sales tax that Americans are
required to pay when they purchase goods at a local level. The difference is
that this is a sales tax on goods produced in Mexico. But it is Americans who
are paying the tax, not Mexicans.
Isnt that interesting? Among the first things that a conservative president
does when he comes into office is to force another tax onto hard-pressed
American taxpayers.
Heres another interesting aspect of Trumps tariff plan: It will inevitably
put some or many Mexican firms out of business. A 20 percent tariff will mean
a reduction in demand among American consumers for Mexican goods. Those
Mexican firms that are barely making it will go under as a result of reduced
demand for their goods. That means increased economic hardship for Mexico.
There is another factor to consider. Trump is exhorting and threatening
American firms who are moving operations to Mexico. That also means increased
economic hardship for Mexico.
With Mexican firms going out of business and American firms operating in
Mexico closing down, that will mean worsened economic conditions and increased
unemployment in Mexico.
What is that important?
For the obvious reason: It will mean more illegal migration into the United
States from people seeking jobs and economic prosperity — i.e., the exact
opposite of what Trump and the anti-immigrant crowd want.
Thats one trouble with Trump and his supporters — sometimes they just dont
think. If they want to decrease illegal immigration, then doesnt it stand to
reason that the way to accomplish that is to encourage economic prosperity in
Mexico? The more prosperity, the less incentive people have to leave home and
go thousands of miles northward to a foreign country in search of work.
So, how can America encourage economic prosperity in Mexico? Through total
free trade, including the exercise of the free, unrestricted right of American
firms to move operations to Mexico and open operations in Mexico, as well as
the exercise of the free, unrestricted right of Mexican firms to export and
sell whatever they want into the United States.
Would total, unrestricted free trade cure all that ails Mexico? No more so
than it would cure all that ails the United States. There is still all the
socialism, interventionism, and regulation that afflict both nations, not to
mention the warfare-state problems of the United States. But theres no doubt
that unrestricted free trade between Mexico and the United States would go a
long way to restoring friendship, peace, prosperity, and harmony between
Mexico and the United States.
Jacob G. Hornberger is founder and president of The Future of Freedom
Foundation. He was born and raised in Laredo, Texas, and received his B.A. in
economics from Virginia Military Institute and his law degree from the
University of Texas. He was a trial attorney for twelve years in Texas. He
also was an adjunct professor at the University of Dallas, where he taught
law and economics. In 1987, Mr. Hornberger left the practice of law to become
director of programs at the Foundation for Economic Education. He has
advanced freedom and free markets on talk-radio stations all across the
country as well as on Fox News' Neil Cavuto and Greta van Susteren shows and
he appeared as a regular commentator on Judge Andrew Napolitano's show
Freedom Watch. View these interviews at LewRockwell.com and from Full
Context.
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