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Mexican President Enrique Peña Nieto backed out of a meeting he had planned in Washington D.C. with President Donald Trump on January 31st, after Trump signed off on an executive order ordering construction of his much-promised border wall. Nieto apparently wasn’t aware that Trump had actually planned to follow through on his campaign promises, and, for the millionth time, Nieto said Mexico wouldn’t be paying for the wall.
Prior to the cancellation, Trump tweeted that if Mexico is unwilling to pay for the wall, it would be better to cancel the meeting anyway.
The U.S. has a 60 billion dollar trade deficit with Mexico. It has been a one-sided deal from the beginning of NAFTA with massive numbers…
— Donald J. Trump (@realDonaldTrump) January 26, 2017
So what’s next?of jobs and companies lost. If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.
— Donald J. Trump (@realDonaldTrump) January 26, 2017
It’s clear the border wall is getting built regardless of who’s going to end up footing the bill - but would it be possible to get Mexico to pay for it? There are a number of ways Trump could put pressure on Mexico where it could be a better deal for them to fork over cash for the wall to avoid damage to their economy.
Speaking of damage to economies, the cost of illegal immigration to the U.S. economy comes out to $113 billion annually, but that’s a subject for a whole other article.
According to the Washington Examiner, Mexicans legally and illegally in the United States send home over $24 billion a year, a ripe tax target to build President Trump’s wall.
Trump during the campaign suggested banning the payments and using them to build the wall in a “one-time payment” of some $10 billion. Others have suggested he would tax the payments. Even at the lowest 10 percent IRS tax rate, enough could be generated in Trump’s first term to complete the partially-built wall, or about $10 billion.
During the election, Trump suggested taxing so-called “remittances” to Mexico from Mexicans. The country’s president recently said that it received $24 billion over just 11 months from those in the United States, according to a new post by the Center for Immigration Studies. In his upcoming meeting with Trump, Mexican President Peña Nieto (planned) to press for continued cash shipment to an estimated 1.29 million homes in Mexico.
Additionally, Trump has threatened tariffs on Mexican imports (both because of trade, and as a threat if they don’t pay for the border).
Quoting from his campaign’s website, There is no doubt that Mexico is engaging in unfair subsidy behavior that has eliminated thousands of U.S. jobs, and which we are obligated to respond to; the impact of any tariffs on the price imports will be more than offset by the economic and income gains of increased production in the United States, in addition to revenue from any tariffs themselves. Mexico needs access to our markets much more than the reverse, so we have all the leverage and will win the negotiation.
Another bullet point floats another idea to pay for the wall: “Even a small increase in visa fees would pay for the wall. This includes fees on border crossing cards, of which more than 1 million are issued a year. The border-crossing card is also one of the greatest sources of illegal immigration into the United States, via overstays. Mexico is also the single largest recipient of U.S. green cards, which confer a path to U.S. citizenship. Again, we have the leverage so Mexico will back down.
As of 4PM EST Thursday, Sean Spicer made a new detail public, that the wall will be funded in part by a 20 percent tariff on Mexican goods.
The Mexican Peso has tumbled since their president canceled their meeting with Trump, and following updates. Let’s see how this plays out for them.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]
