SpokenTruth said:
Well, crap. That's supposed to have a "t" with "can". Then you can't use trade deals with Mexico as a way to say Mexico is going to pay for it. Because those same factors are directly affected by far more market forces that just trade. Simple currency exchange rates can make or break for billions each year. I'll use some numbers for you. Current trade deficit with Mexico is ~$71 billion. Say this new US-Mexico-Canada Trade Agreement reduces that by $2 billion per year. That means $2 billion more in local investment, interstate commerce, jobs, etc... Now, tax rates on corporate income are now just 21% (looks like they should have kept it at 35%) meaning federal revenue increases $420 million per year. That would take 95 years to pay for a $40 billion wall which is long after the 16 year sunset expiration date on the agreement anyway. Further, this is largely just NAFTA 2.0. Very little is actually changing so where would we get a drastic change in government revenue from? And if you don't believe me, do you believe the experts?
“Even if we accept conceptually the argument that government revenue attributable to the revised trade agreement constitutes ‘Mexico paying for the wall,’ there are no plausible assumptions of USMCA’s impact that would see government revenue increase by $25 billion,” said Geoffrey Gertz, a fellow in the Global Economy and Development program at the Brookings Institution and a research associate at the Global Economic Governance Programme at the University of Oxford. “Ultimately USMCA is very similar to NAFTA, and so we shouldn’t expect any substantial economic shifts from the new agreement,” Gertz told us via email. “It’s difficult to argue that that NAFTA was ‘anti-USA’ and ‘very costly’ but that USMCA will save us lots of money, because there’s not a huge difference between the two agreements.” Kent Smetters, a professor of business economics and public policy at the University of Pennsylvania’s Wharton School, told us none of the concessions won by U.S. negotiators amounts to enough to offset the cost of a border wall. “USMCA is definitely positive for the U.S. economy but a fairly minor update to NAFTA,” said Smetters, who was an economist at the Congressional Budget Office in the 1990s. “The real value comes from renewing the essential elements of NAFTA itself.” “USMCA provides some specific trade openings that benefit all three countries along with some IP [intellectual properties] updates. (The value of the IP update is hard to assess until we understand the enforcement commitment.),” Smetters said. “Relative to NAFTA, the Mexican government would not nearly lose enough tariff revenue that could be constituted as paying for the wall, at least the wall as previously envisioned by the Administration; nor would the U.S. government revenue increase enough based on a dynamic score. In fact, the additional revenue to U.S. relative to NAFTA would, optimistically, not cover annual maintenance and improvements of the wall much less the original build.” Alan V. Deardorff, the John W. Sweetland professor of international economics and professor of public policy at the University of Michigan, said he is not convinced that the USMCA will result in extra revenue to the U.S. government. “In economic terms, the new deal is not in fact better than the old one, but it may (only may) benefit US workers to a small extent,” Deardorff told us in an email. “U.S. firms (except for a handful of dairy farmers who gain a little) will do worse, not better, since it increases their costs. I don’t see any way that it actually brings in money to our government. It is likely to hurt Mexico, as presumably intended, but not in a way that benefits us. So no, the statement [from Trump] does not make sense.” Trump’s claim seems to assume any gains from USMCA are “extractions from Mexico,” Gertz added. “This assumes a zero-sum view of trade, where one country’s gains are another’s losses – which cuts against the typical economists’ arguments that free trade is positive sum, that both sides to the agreement benefit.” “I expect essentially zero change in revenue collected from tariffs arising through the USMCA,” Chad Bown, senior fellow at the Peterson Institute for International Economics, told CNBC in December. “Under both the existing NAFTA and President Trump’s proposed new deal, the United States charges zero tariffs on trade with Canada and Mexico.” Mexico’s former chief NAFTA negotiator, Kenneth Smith Ramos, said that nothing in the USMCA would redirect money toward a wall. Lori Wallach, director of Public Citizen’s Global Trade Watch, told PolitiFact: “I do not see any scenario under which the U.S. government gets more money from Mexico per se. Even if the U.S. tariffs had been raised, that would be paid by Mexican exporters, not the Mexican government,” she added. In a scenario where private American businesses significantly increase their revenue under the new deal, and overall U.S. tax revenues increase, then Congress might have those funds to appropriate, Wallach noted. But even then, lawmakers would have to agree to specifically allocate those funds for the wall. That seems dubious, given the ongoing government shutdown over border wall funding. "I guess Trump could propose a new tax on increased revenue of U.S. firms related to trade with Mexico, but that is not passing through Congress," Wallach said. "If they cannot get appropriations for a wall, imagine trying to pass a new tax to fund the wall."
Finally, Trump and the White House have so far failed to provide any sort of guidelines, outlines, or estimates of how and how much it would generate. Such vagueness even when officially requested this information by experts in the field casts extreme doubt over the validity of their claims. Clete Willems, deputy director of the president’s National Economic Council and a former chief counsel at the Office of the U.S. Trade Representative was asked directly how this deal would pay for the all and he responded with a rather peculiar answer, "I’m not an immigration expert, so I’m not going to weigh in on that issue." Did one of their senior advisors just mix up trade with immigration?
Oh, and let's not forget.....the US-Mexico-Canada Trade Agreement hasn't even passed yet and it looks like it certainly won't pass as it was written. By the way, Mexico won't sign it at all if the US does not lift the tariffs on steel and aluminum. You know, the tariffs that Trump wanted in place as part of the direct way for Mexico to pay for the wall. |
I don't remember saying anything about Mexico paying for the wall through trade.
