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Proposed Import Tax Could Leave Mexico in Recession

3 years 11 months 2 weeks ago Friday, January 27 2017 Jan 27, 2017 January 27, 2017 9:09 PM January 27, 2017 in News

WESLACO – Economists said a trade war could spark with Mexico if President Trump enacts his proposed import tax.

President Trump floated Thursday a plan to pay for the wall by taxing imports from Mexico.

One analyst said imposing a tax on Mexican goods would violate NAFTA and bring the deal to an end. He said Mexico could be hit with increased inflation, interest rates and unemployment.

The country could also be forced into recession while they continue to deal with the plummeting peso. However, experts said the U.S. could also feel the ripple effect.

Economist said some Mexicans would leave a struggling economy for the U.S., similar to what happened when the value of the peso tanked in the mid-90s.

On Friday, President Trump was asked what the import tax might mean to the average U.S. citizen on the Christian Broadcast Network.

“Well, I think that some of it may get passed along, but it also creates jobs,” he answered. “So, I’m not against something like that. But with respect to Mexico, something else could happen which would be much more positive for both Mexico and the United States.”

Several economists said they disagree with the belief that the tax would create jobs. They said a trade war could slow down economic growth in the U.S.

Experts said taxing goods coming from Mexico could cost the U.S. 300,000 jobs by the end of the first year. They also believe Mexico could retaliate and impose their own import tax on U.S. goods.

Additionally, economists told the AP economic chaos in Mexico could help strengthen drug cartels.

The Trump administration has not come forward with a formal plan to pay for the border wall. 

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