chapotraphouse

Mexico has already laid out plan to cut Chinese imports in apparent nod to Trump today. The threat of tariffs is working. The US gets what it wants on the condition that it will then relax the tariffs.

But what can you do? 80% of Mexico’s export is to the US. The tariffs might inconvenience American automakers and inflate car prices at home, but for Mexico it means a substantial loss of export revenues, factories cutting production, unemployment and hence lower demand for consumption, a downward spiral toward recession. The damage exerted to either country is disproportionate.

Unlike China who wants to promote win-win cooperation, America coerces other countries into a lose-lose situation and the only choices you are given is to lose small or to lose big. The answer for most sane leaders is obvious.