Commentary:
The other day, I was waiting to buy some tape at the local Family Dollar store. I was behind a family of four buying household products and groceries at the checkout stand. The family bought a variety of items, including socks, food, household cleaning tools, and toys. Being the sometimes-impatient person I am, I started to get anxious, as they had a full basket. When the family finally checked out and paid for their items in cash, I saw them exit the store and load them into an older car that was fairly banged up.
I paid for my tape and sat in my car processing what I had just seen, and how it related to the firestorm of phone calls I have been getting from the press and business community on the impact that the 25 percent tariffs on Mexican and Canadian imports, and the extra 10 percent tariffs on Chinese imports that President-elect Donald Trump is promising would have on Americans. The obvious answer is that the tariff would act as a tax on American consumers, and we would all be paying more for the goods we buy from these countries. I only shop at discount stores such as Family Dollar when I need something in a hurry. I generally don’t buy items such as groceries or clothes there, but I also will probably be buying tariffed goods elsewhere if Trump follows through on his promise.
However, millions of economically challenged Americans do shop at discount stores such as Family Dollar to stretch their tight budgets. If you look at where the majority of the products at these discount stores are produced, it is in countries such as China and Mexico. It is precisely the Americans such as the family I saw when buying tape that will be seeing more of their paycheck eroded by the proposed tariffs. With these tariffs, the family would be paying 25 percent more for the Mexican onions and limes, and 10 percent more on the Chinese-made toys, and household tools that they bought – this on top of already existing tariffs that Trump imposed on a wide variety of Chinese imports during his first term.
As I sat in my car, I started to think about the worried discussions I have been having with people and companies that might be affected by the proposed tariffs. I then decided to step back and take a deep breath, and think that there might not be any tariffs imposed at all when Trump takes office. I thought about Canadian Prime Minister Justin Trudeau’s meeting with President-elect Trump at his Mar-a-Lago club a few weeks ago. After the meeting, Trudeau commented that he and Trump had “an excellent conversation.”
Likewise, I thought about Mexican President Claudia Sheinbaum’s recent telephone conversation with Trump, after which she stated at a daily news briefing, “There will be no potential tariff war.” Were these two heads of state provided assurance by Trump that the tariffs were a bluff, or a way to get some press in favor of his initiatives? Immediately after Trump’s phone call with Sheinbaum, he reported to the press that the Mexican President had promised to close the border to migrant entries into the U.S. However, this did not correlate with what Sheinbaum stated was discussed on the phone call.
So, what gives? During his first term, Trump was alarmed at the amount of Mexican steel the U.S. imports from Mexico. This led him to impose tariffs on Mexican steel, after which he rescinded them when Mexico stated that it will restrict these types of exports to the U.S. He also threatened tariffs on Mexico during surges of migrants entering the U.S. from Mexico. He scratched these tariffs after then-Mexican President Andres Manuel Lopez Obrador promised to crack down on northbound migration flows into the U.S.
While I don’t go to sleep at night with the 100 percent belief that Trump will not impose tariffs on our two U.S.-Mexico-Canada-Agreement (USMCA) partners, I will not go around like Chicken Little screaming that the sky is falling. When it comes to global trade, Trump has a history of making controversial statements to stun countries with which he thinks the U.S. has an unfair trade relationship. This even extends to Mexico and Canada, our two largest trade partners, under which we trade based on the policies all three countries created when the USMCA was created, which Trump himself negotiated during his first term. The USMCA is up for review in 2026, and the threat of tariffs on our two North American partners could be a way Trump is attempting to soften up their negotiating positions ahead of future negotiations. Or the proposed tariffs could be a way for Trump to exact concessions very quickly from Mexico, Canada, and China to announce wins early in his presidency.
Given the fact that Trump favors using unconventional attacks and chaos with trading partners, we will have to wait until he assumes office in January to understand his real intentions. Meanwhile trade continues unabated, but cautiously between the U.S. and its largest trading partners, while strategic planning remains a challenge.
Jerry Pacheco is President of the Border Industrial Association. Jerry Pacheco's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.