Trump Tells Mexico and Canada: America First

President Trump tells Mexico and Canada: America First.If Mr. Trump believes that Mexico and Canada are damaging America’s national security — by failing to sufficiently help us on the border to prevent illegal crossings and the influx of fentanyl and other drugs, or not helping us defeat the Mexican cartels — then I believe he is absolutely right to use his tough tariff diplomacy by slapping 25 percent tariffs on both countries.And that includes the 10 percent tariff hike on Communist China, which is supplying the fentanyl drug components that are manufactured in Mexico and sent across the American border.China is also subverting the North American free trade deal, the United States-Mexico-Canada Agreement, by building plants in Mexico and then dumping cheap cars into America — without adhering to America’s domestic content and other rules.With today’s announcement by Press Secretary Karoline Leavitt that Mr. Trump has made up his mind and will impose these tariffs tomorrow, it’s very clear that’s the president’s conclusion.Whether he has any specific metrics in mind regarding illegal crossings or drugs, or sex trafficking, remains to be seen.Whether he will engage in additional negotiations with Canada and Mexico remains to be seen.Yet he has laid down the law.Tariffs are a legitimate tool to engage in national security policy as well as economic policy.Presumably, if Mexico and Canada meet Mr. Trump’s requirements, then the tariffs could be lifted.We don’t know that, though.And we await some sort of statement from the president himself, perhaps tonight or tomorrow.By the way, Mexico’s ties to China have become a major problem.Mexican imports from China have increased 50 percent over the last 5 years.And Chinese investment in Mexico is up the same 50 percent.The United States-Mexico-Canada Agreement rules must be changed to place explicit limitations on Chinese content.Right now, America is running a $170 billion trade deficit with Mexico, sustained across numerous product groups.Canada is a different story.America is running a $60 to $70 billion trade deficit with them, but if energy is removed we actually have a surplus with Canada — including auto and manufacturing goods.Sixty percent of American oil imports come from Canada.But Canadian oil companies provide us with a 20 percent discount because their heavy crude has to be refined into gasoline and diesel fuels.As some oil experts point out, though, a 25 percent tariff wipes out the 20 percent discount.And they fear that gasoline prices in the midwest and the northern states could jump by between 40 cents and 75 cents.So, the oil industry is hoping for a carveout from the 25 percent tariff.On the tariff news announced by Ms. Leavitt, the Dow Jones fell 330 points.Wall Street continues to believe that tariffs are inflationary.As I’ve suggested before — they are not.Sure, there might be some minor one-time product price increases.Yet exporters to America will bear 50 percent or more of the tariff increase by lowering their prices in order to sell to American consumers and businesses.That was our experience with China, during Mr. Trump’s first term.The only way inflation is going to pick up in any sustained fashion is if the Federal Reserve keeps the printing presses wide open.In Mr. Trump’s Truth Social post on Wednesday, he criticized the Fed for failing to stop the vast Bidenflation that ruined blue-collar affordability with a 20 percent-plus price hike over the past 4 years.Yet Mr. Trump’s economic program of lower tax rates, deregulation, unleashing energy production, large reductions in federal spending and the D.C. bureaucracy, is itself profoundly counter-inflationary and pro-growth.That is why inflation is not the issue.And yesterday, Mr. Trump posted that he will not tolerate any replacement of the mighty American dollar in international trade.He threatened 100 percent tariffs on the so-called Brics countries — which include Brazil, Russia, India, China, and South Africa.King Dollar is also counter inflationary.Instead, Mr. Trump’s tariff diplomacy is geared toward protecting America’s national security and its economic security.And he insists… that America comes first.From Mr. Kudlow’s broadcast on Fox Business Network.

Trump Tells Mexico and Canada: America First

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