Former Mexican President Vicente Fox just sent a loud and clear message to U.S. President Donald Trump, which says that Mexico will not be bullied.
“Trump has brought back a very strong Mexican spirit and we’re ready for the trade war, and we’re ready, of course, for not paying (for) that wall,” Fox said Friday in an exclusive interview on TODAY.
Earlier in the week, Trump signed an executive order calling for the government to start construction on his fabled southern border wall immediately. This announcement put current Mexican President Enrique Pena Nieto, whose approval ratings are currently around 15 percent, in an incredibly awkward position. Nieto was scheduled to meet with Trump at the White House next week, however, following Trump’s announcement the Mexican president confirmed that he was canceling his trip to the U.S.
Trump’s press secretary, Sean Spicer, also floated the idea that the U.S. would get Mexico to reimburse them for the cost of the wall by imposing a 20 percent tariff on all Mexican-made goods entering the U.S.
On Twitter, acclaimed economist Paul Krugman explained how colossally stupid it would be for Trump to start a trade war with Mexico.
The Mexican tariff incident is truly amazing, because it shows dysfunctional, ignorance, and incompetence at multiple levels. The motivation for Spicer’s initial remarks seems to be that Trump is feeling disrespected (again): people are making fun of him (again) because he promised that Mexico would pay for the wall, and it won’t. So someone had the bright idea of claiming that a tariff will do it imagining that the House plan for a border tax adjustment as part of corporate tax reform is the same thing. But it isn’t.
For one thing, that adjustment can’t be country-specific; also, it isn’t really just like a tariff. But wait, it gets worse. Tariffs aren’t paid by the exporter; it depends a bit on the details, but it’s basically a tax on domestic consumers. Wait, it gets worse still: the claim that everyone else taxes imports is wrong too. A VAT [Value-added tax] is NOT like a tariff. It’s a sales tax that is neutral in its effects on trade. Now, the proposed border tax adjustment is a bit different. It might in fact act like a combined export subsidy and import tariff. But for that very reason, it might well be considered WTO-illegal because it’s not just doing what others do. And even if it somehow doesn’t bring down the world trade system, its effects would be dissipated by a stronger dollar.
So let’s sum up: Trump was probably feeling low, so aides told him they had an answer to his critics but they didn’t understand either the economics or the world trade rules, and didn’t realize how explosive the whole thing was. Now they’re trying to walk it back, looking even more ridiculous in the process. How are we going to survive years of this?
The Mexican tariff incident is truly amazing, because it shows dysfunctional, ignorance, and incompetence at multiple levels. 1/
— Paul Krugman (@paulkrugman) January 26, 2017
On Friday, Fox told NBC’s TODAY that Mexico was prepared to enter a trade war with the U.S. and went on to dress down America’s impulse-driven Commander-in-Chief.
“President Trump is playing around with everybody, throwing around smoke balls. It will not work with him. He has now faced his first defeat, and he cannot digest a defeat. His ego doesn’t let him do that,” Fox said.
Fox said that he did not see a diplomatic solution to this problem and warned of worsening relations between Mexico and the U.S.
“We are at the very lowest point since the war between Mexico and the United States,” he said.
But the former Mexican president also expressed his doubt that the U.S. would be foolish enough actually to start a trade war with his country.
“I don’t think he will do it because there is so much to lose for the United States, starting with 10 million jobs, where Mexico is accountable for U.S. citizens, by what we import every year into Mexico — $250 billion,” he said. “So the first big loss is 10 million U.S. workers jobs, which he has promised to protect, and he’s doing exactly the opposite.”
Fox has been a long-time critic of Trump’s border wall. In 2016 the former Mexican president famously declared point blank on TV that he (Mexico) was “not going to pay for that f*cking wall.”
Fox also praised Nieto’s decision to cancel his trip to the White House calling it “a wise move” and noted that his response to Trump has already helped the embattled Mexican president in the polls.
“This is a big opportunity for President Pena, personally, to recuperate his leadership in Mexico,” he said.
The former Mexican president said his country’s response should teach Trump that “you don’t play around with Mexico.”
“We might not be too big, but we are smart and we’re firm, when speaking about solidarity, when we’re speaking about honesty, when we’re talking about dignity.”
No one could blame Mexico if they decided to modify their economic policies to protect themselves from the U.S. There’s little doubt that many any other countries are also looking at this situation and reassessing their business relationship with the U.S. as well.
It look’s like America’s doll-handed schoolyard bully is about to get his nose bloodied by a kid who won’t tolerate his nonsense.