Ricardo Pascoe Pierce
How can we explain the Morenismo movement’s smiles of satisfaction after Trump’s announcement? It would seem that they had won the soccer World Cup. This is strange, considering that we were hit with 25% tariffs on steel and aluminum, in addition to the automotive industry, based on components manufactured in the United States.
Certain companies began to slow down their production lines or, outright, closed them “temporarily”. The CTM union announced that General Motors had laid off 1,200 workers. Stellantis and Toyota “temporarily” shut down their vehicle production and assured that they would not lay off their staff. How long can the impasse last? They reckon that Trump will have to understand that things cannot go on like this, with tariffs, and rectify the situation. For his part, he swears that there will be no reversal of his economic decisions.
I believe Trump in this case. The logic of the global stock and financial markets is that they are in a process of loss of value calculated in the trillions, and they foresee that the global economy will enter into a “recession with inflation”. The markets are making a long-term bet. However, Trump intends to maintain the tariffs until the end of his presidential term.
A few hours ago, on a Bloomberg program, an interviewee was asked if what Trump was doing resembled the Reagan-Thatcher pairing—ushering in the so-called “neoliberal” era in the world economy. It was the era of the privatization of public goods, the opening up of markets, the elimination of investment regulations, and the deregulation of labor markets. Taxes on investments were reduced as an incentive to increase their rates of return. The economic theory of trickle-down economics reigned supreme as a social policy.
The interviewee’s response was categorical: while Reagan and Thatcher had theoretical and practical foundations for their “economic reengineering,” Trump has not presented coherent reasoning, except for the notorious desire to demolish the current economic system based on prejudice and phobias, as well as a thirst for revenge. The interviewee concluded that Trump’s proposal is the worst recipe for the collective economic suicide of the United States.
In all the analyses of Trump’s tariffs, the ideological current of protectionism is exposed, always mixed with a dose of nationalism seasoned with populism. From President Polk, who invaded Mexico in 1847, to President Teddy Roosevelt, who invaded Cuba to establish US rule over that island, the idea of exceptionalism has been present in their political thinking. However, the “fortress USA” idea is the most important, expressed in the Monroe Doctrine. Declared by President Monroe in 1823, it stated that “America is for Americans”. It stipulated the rejection of European colonization of America and rejected its interventionism. It was the era of the wars of independence of the Spanish, Portuguese, English, and Dutch colonies in “the Americas”.
Trump has turned the Monroe doctrine into an economically and ideologically protectionist concept of national security, rejecting the imposition of ideas “from outside.” Hence, the imprint of dominating Canada and Greenland to the north and the Panama Canal to the south. Everything fits into the idea of the “Fortress of America,” including the “Gulf of America.”
The important thing is the imposition of the new global economic mantra: protectionism. This makes European countries uncomfortable because their political and economic thinking is based on open borders, not closed ones. The same is true of Canada, which has reacted with political and economic fury to US protectionism and is reorienting its economy towards Europe.
No country has reacted with such glee and almost festivity to Trump’s announcements as Mexico. Mexico, the country that did not impose reciprocal tariffs on the United States when they imposed 25% on steel and aluminum on us, even seems to enjoy its relationship as Trump’s emotional slave. The government, Morena, and business people uncorked the champagne bottles: Trump understood us, and we are responding with a more protectionist program than his.
Mexico’s response to the crisis that is just beginning is an 18-point platform that is more protectionist than Trump’s proposal. The Morena government proposes turning increasingly inward, isolating from the world economically, and waiting for Trump’s next decisions.
Looking inwards, the government proposes price controls, food and energy self-sufficiency, car manufacturing in Mexico, stopping the import of fertilizers, increasing the sale of national products in shops, “creating” 500,000 jobs, and promoting job banks.
To achieve other objectives, it proposes to spend public resources, the origin of which it does not specify, on increasing the minimum wage, expanding social programs, building trains, building social housing, offering loans to micro, small, and medium enterprises, investing in science, and accelerating road construction.
The government offered to simplify procedures before the Federal Commission for the Protection against Sanitary Risk COFEPRIS, reform the procurement law, and create a digital window for investors.
Mexico’s response is to be more protectionist than the President of the United States. Those 18 points threaten to turn Mexico into an exegete of protectionism. When they heard the President’s proposal, the audience of Morena politicians and business people broke into shouts, with fists raised to the sound of: Yes we did it!
“Yes, we did what?” we must ask ourselves. This euphoria has a strong element of tunnel vision. Tariffs have not been stopped. Canada achieved the same thing and did not celebrate it as a triumph. On the contrary, Canada is preparing for the onslaught of Trump’s economic policies. Mexico is celebrating as if the war were over, when in reality, it is just beginning, and the country must be prepared for future attacks.
Living in the illusion of protectionism proposed by the government does not make us strong in the face of future dangers. It weakens us because these objectives will not be achieved, among other reasons, because economic realities will not allow them and because we do not have even remotely the money available for such purposes. Mexico is a country close to technical bankruptcy, both economically and fiscally. Recession is more likely than the opposite.
So what should we be doing instead of building castles in the air? Curbing what discourages national and foreign investment. The judicial election must be scrapped, and the energy, telecommunications, transport, pharmaceutical, and mining sectors must be opened up to private investment without prejudice. Public-private projects must be the norm, not the exception. Public money will be prioritized for security, education, health, and housing. Transparency and accountability are the only way to combat the current corruption.
And political issues must be resolved: intolerance of the opposition is unacceptable when it comes to uniting the nation, especially when there is a lack of dialogue with social dissidents and an excess of dialogue with criminal groups.
The government must cut the umbilical cord linking drug trafficking with politics. Confronting organised crime and controlling customs are necessary for consolidating the country’s economic strength.
In short, the correct response to Trump is not to be more protectionist than he is, as Morena and, I believe, AMLO propose. The appropriate response is to open up our economy boldly to create a solid base from which to resist the attacks coming from the North. Without that solid base, we will continue to smile, dance, and sing until any idea of an independent Republic is buried.
@rpascoep
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