Let’s talk walls.
Donald Trump continues to tell us that Mexico is going to pay for the Trump Wall on the border of Mexico. Mexican President Enrique Peña Nieto has said fat chance and cancelled a meeting with Trump in January as a result. Leaders throughout Mexico have a pretty uniform stance to the idea: Screw Trump.
Btu Trump says Mexico will pay, dammit, so the plan he floated is a 20 percent tariff on Mexican imports.
In other words, American consumers will be paying for the wall, not Mexico.
It astonishes me how many people can’t seem to grasp this, but like clockwork the faithful are all abuzz trying to defend the plan when it doesn’t take more than two seconds of thought to realize what’s what. In truth, this is basic stuff. You force a cost onto a business, that cost gets passed on to consumers. In this case, that means Americans buying any of the hundreds of billions in goods imported from Mexico, which includes car and car parts, electronics, machinery, fuel, food, medical equipment, and more, will be the ones paying.
And take note that even if these companies don’t jack up prices to cover this — and let’s be honest, the idea that they wouldn’t is ridiculous — it’s still not Mexico paying for it, it’s PRIVATE BUSINESSES.
So no, Mexico is not paying for the wall, no matter how much he repeats the mantra. Forbes does a super thorough, often head-spinning breakdown of how this surprisingly complex system of transactions would work, and the end result is always the same. You pay for it.
When confronted with this uncomfortable reality, I’ve seen people suggest that this policy will prompt companies to relocate to the U.S. in order to avoid the tariffs. This argument is absurd on its face. First, why would a company go through the trouble and expense to relocate when they can just pass on the cost to the consumer? Second, you expect them to relocate to a country where they’ll be expected to pay higher wages and abide by stricter operating standards? And third, many of these companies are actually American companies, so …
And once again, because it’s important to drive this point home, who is disproportionately impacted by a hike in consumer good prices? That’s right, the poor and middle class. The very people Trump claimed wouldn’t be forgotten would feel the impact of this more than any other.
Oh, and it’s not a one and done cost, either. Oh no. Most of the estimates for construction of the wall are only talking about the construction itself. He claims it will cost about $10 billion. Mitch McConnell says it will be around $15 billion. Engineers say it will actually be closer to $25 billion. But here’s what most estimates are ignoring: that 2,000 miles of wall actually has to be manned and maintained. You know all that national infrastructure Trump said was falling apart during his inauguration speech? The wall will become part of it. It has to be taken care of. That is a cost that NEVER, EVER GOES AWAY. It’s perpetual, and in fact grows higher with each passing year as the wall ages. That has to be paid for, too. By you. And that’s not even taking into account all the people who will have to man the wall day and night if it’s actually going to serve its intended purpose.
Which it won’t, which makes this expensive pet project even more ridiculous.
But that topic is for tomorrow’s post.