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President Donald Trump is heading to San Diego on Tuesday to inspect eight different prototypes for his long-promised wall along the US-Mexican border.
But his repeated pledge to get Mexico to actually pay for the construction of that wall seems less likely to happen than ever.
The Trump administration has spent the past few months repeatedly provoking and angering its neighbor to the south, threatening to levy huge tariffs against its steel exports and negotiating aggressively for a new version of NAFTA that would favor US automakers over Mexican ones.
In February, Mexican President Enrique Peña Nieto called off his first visit to the White House after he and Trump had a tense telephone conversation in which they clashed sharply over the issue of Mexico funding the wall.
Trump brought up the call with the Mexican leader during a rally in Pennsylvania on Saturday when the crowd chanted, “Build that wall.” Trump told the crowd that Nieto had asked him to make a statement saying Mexico would not be paying for the wall, to which Trump claims he replied, “Are you crazy? I am not making that statement.”
Trump’s bid to get Mexico to pay for the wall was always a long shot given the tens of billions of dollars the project is projected to cost and his early campaign rhetoric denigrating Mexican immigrants as murderers and rapists.
Mexico’s internal politics are making it even more unlikely. Mexico has a presidential election in July, and the current frontrunner, Andrés Manuel López Obrador, is a leftist firebrand who has promised to put Trump “in his place” and pledged to turn to the United Nations to defend Mexico should the US try to force Mexico to pay for the wall.
Trump’s harsh rhetoric about Mexico has been steadily making a chilly relationship even colder. Now his hardball tactics on trade are making any sort of face-saving compromise between the two countries even less likely.
Trump is souring the US-Mexican trade relationship
The Trump administration’s new steel and aluminum tariffs have brought pushback and threats of retaliation from Mexico.
Technically, the tariffs that Trump announced on Thursday will spare Mexico — and the US’s other NAFTA trading partner, Canada — for the time being. But analysts say the administration’s bold threats to deploy them riled up Mexico. And the fact that Trump could choose to impose them in the near future means that tensions aren’t going away anytime soon.
Mexico is the world’s fourth biggest exporter of steel to the US, and Mexico would lose an estimated $1 billion in exports from Trump’s tariffs if they were fully implemented.
Before the official rollout of the tariffs last week, Mexico signaled that the US would set off a trade war if it dared to target Mexican steel. “We would have to target our response at the things they export that are most politically sensitive and hit exactly those goods. We have the ability to respond,” Mexican Economy Minister Ildefonso Guajardo said last week.
American tariffs against Mexico and Canada are particularly controversial because NAFTA was designed to virtually eliminate trade barriers between the three countries to make it easier to sell goods to one another. While the three countries do use some trade barriers to protect certain particularly vulnerable domestic industries from competition (the US has protected its lumber industry from Canadian competition for decades, for example), the tariffs that the US is imposing on steel and aluminum are exceptionally severe.
On top of that, the Trump administration is enacting the tariffs by using a controversial and obscure loophole in US trade law, arguing that the US is entitled to protect its domestic steel industry to ensure that it can meet national security needs by producing enough steel at home for things like weaponry and infrastructure.
To most experts and the international community, this rationale rings hollow and seems like flimsy cover for a political move that Trump is simply using to please his base of blue-collar, anti-free trade supporters.
NAFTA talks were already hard. Now they’re becoming harder.
The drama surrounding Trump’s tariffs isn’t over yet because now he’s using them to get a leg up over Mexico in NAFTA negotiations.
“Due to the unique nature of our relationship with Canada and Mexico ... we’re going to hold off the tariff on those two countries to see whether or not we’re able to make the deal on NAFTA,” Trump said on Thursday.
The meaning of Trump’s language wasn’t entirely clear, but he suggested that he’d exempt Canada and Mexico from tariffs if they agreed to a deal that’s to his liking.
In other words, he’s now using the threat of tariffs as a bargaining chip in NAFTA talks. And experts say it could complicate negotiations over the deal by making Mexico feel like the US is trying to put a gun to its head.
“Mexico understands the domestic politics behind the steel and aluminum tariffs, but they certainly did not appreciate the linking of the tariffs to the already challenging NAFTA negotiations,” Christopher Wilson, deputy director of the Mexico Institute at the Wilson Center, told me.
So far, NAFTA negotiations are moving at a sluggish pace because the US has proposed a number of US-centric rules, including one that would give US auto manufacturers a big leg up over Canadian and Mexican ones by requiring more of the car parts made in North America be made in the US.
Mexico doesn’t want to look like it’s being pushed around
Trump’s aggressive treatment of Mexico on trade has put Nieto, the incumbent president, in a tough spot.
With the elections approaching this summer and Trump constantly making news about cracking down on trade with Mexico, Nieto is wary of making any concessions to the US that make his party look weak as he prepares to leave office. With left-wing frontrunner Obrador doing well in the polls, it seems that taking a very hard line against Trump is the best position to take in Mexican politics at the moment.
Crucial among the concessions Nieto would want to avoid is caving to Trump on paying for the wall. Expert estimates for the cost of the wall range from $15 billion to $25 billion, and Mexico has no interest in footing the bill.
If Trump wants to fulfill his campaign promise, it seems increasingly likely he’ll have to turn to more symbolic arrangements to show that Mexico is the one paying the price for the wall. He’s suggested that the US could force Mexico to pay for the wall indirectly by getting a good deal for the US out of NAFTA negotiations.
But it’s unclear what that would look like or how it would work. If Trump means that the potential boost to the US economy would help subsidize the cost of the wall, US taxpayers would still be footing the bill.
