February 02, 2017

Politicians are often taken to task for making election promises they fail to keep once elected. Candidates should be held accountable for the policies they advocate when campaigning for votes. However, delivering on the bluster that politicians often espouse during the heat of an electoral battle can do more harm than good.

President Trump’s stance on trade between the U.S. and Mexico is a striking example. During the presidential election, he vowed to stop jobs being exported to Mexico and to correct what he regards as an unacceptable trade imbalance between the two countries.

Once in office, the President wasted no time in following through on these promises. He proposed a 20% tariff on goods shipped from Mexico to the U.S. to pay for a wall along the border designed to keep out illegal immigrants and criminal elements. He promised “consequences” for U.S. companies that move manufacturing plants to Mexico, and lauded some manufacturers for creating jobs on home soil rather than across the border.

Much has been written about why slapping tariffs on goods moving between the two countries is hugely damaging. The policy would undermine the complex supply chains that support key industries in the U.S. such as automotive manufacturing.  American consumers would pay more for goods made up of components that cross the border several times. Consider, for example, the manufacturing process that creates a modern automobile seat belt. The Financial Times described some of the steps as follows:

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