Trump’s BRICS Tariff Threat and the End of the USMCA?
Trump threatens 100% tariffs if BRICS+ pulls away from dollar trade. Mexico, Canada free deal under serious threat for first time in its 30-year history.
We may be 24 hours away from the end of the USMCA, at least for a little while.
Trump was back doing what he does best – yelling into the microphone about what previous Washington leadership has done and what he and his team are going to do to fix it.
Anyone in the C-suites of American business who is not prepared for what’s to come, namely tariffs, is not a very good executive. We don’t want to hear your “oh, woe is me” on CNBC when tariffs on Mexico, or higher ones are China, (which I doubt) come down the pike. You’ve only been warned since Trump announced he was running for office. And if you were too busy counting the number of genders on your staff to make sure you were a good person and hired the right people, Trump said it again to the World Economic Forum last week.
Let’s start with the BRICS tariff threat from Jan. 30th.
Here he is on Truth Social:
These countries were fine with the dollar. It’s easier for them to stick with it. It’s plentiful. It’s reliable. And interest rates are favorable.
If you want them to remain with the dollar here is what you have to do, Mr. President: Give The Russians their Central Bank cash back.
All of this happened because the BRICS felt that their companies and their economies were now at the whim of an unpredictable American sanctions regime. BRICS grew to BRICS+. I don’t know how many new countries joined, but that’s irrelevant. The point is that these emerging market nations fear they are one felled tree away from climate change sanctions from the West; one banned pride parade away from sanctions on their national champions. The freezing of Russian Central Bank dollars and euros led them to this belief.
Washington turned the dollar into an economic weapon. To avoid the shrapnel, the BRICS want to move away from the dollar. The Biden regime created this mess by taking hold of Russian money and now giving it to one of the most kleptomaniacal governments in Europe – Ukraine.
Mexico and Canada Free Trade Deal Threatened
I honestly don’t know if Trump will go through with imposing 25% tariffs on Mexico and Canada this weekend. If so, they could be very short-lived. See the Colombia threat as a potential guidepost. (My two centavos in Newsweek here and see “The Petro Lesson” by Kevin Ivers here on Substack.)
Still, the idea for these tariffs was explained recently by Commerce Secretary nominee Howard Lutnick in his Senate confirmation hearing:
“This tariff is to get them to shut the border and end the fentanyl trade,” Lutnick said. “This is a separate kind of tariff. It is designed to create action from Mexico and Canada and if they execute, there will be no tariff.”
Smart executives are already preparing for tariffs. Trump’s only been calling himself Tariff Man since 2017 and is the Western leader who single-handedly changed the entire conversation on globalism since. No business should be shocked by this, even if they are suffering from Trump Derangement Syndrome. Those sufferers should have been doubly prepared, in fact.
This is the way to be:
“We have capacity in the United States to shift some production from Mexico,” GM’s CEO Mary Barra said in an investor call this week. “We are working across our supply chain, logistics network, and assembly plants so that we are prepared to mitigate near-term impacts of tariffs.”
For example, the GMC Sierra and Silverado pick-up trucks are made at a plant in Mexico and in Fort Wayne, Indiana. But the Mexico plant makes about 100,000 more per year, most geared towards the U.S. market, and the plant is running at nearly 100% capacity. The Fort Wayne plant, which makes the same vehicles, build fewer Sierra’s and Silverado’s than their Mexican counterparts and the factory is at about 83% capacity.
Our trade balance with Canada is off-kilter. The deficit was $16.29 billion in 2017 and is now around $60 billion. The deficit with Mexico was $69 billion in 2017. But since the 2018 tariffs on China, the goods gap with Mexico has more than doubled and likely ended 2024 at a record $162 billion.
The gloves are off now that Trump has already used tariffs to get Colombia to take back deportees. The tariff threat policy works.
Earlier this week, The Washington Post wrote a long article about how inflationary the Mexico and Canada tariffs, if they are even applied, will be on the American consumer.
The article did not quote anyone who might think otherwise.
They could have quoted Lori Wallach of Rethink Trade who is a Democrat, or the Economic Policy Institute, all well-known in liberal media circles. These are very credible individuals.
The reporters also could have, without any heavy lifting or phone calls required, quoted Lutnick who said tariffs are not going to cause inflation. They could have at least put that in there. He just had his nomination hearing with the Senate Commerce Committee this week, for crying out loud.
WaPo reporters could have pointed out that China Section 301 tariffs, of which over $400 billion worth of goods were tariffed at 25%, did not lead to inflation. It neglected to note that (former) TSY Sec Janet Yellen said that China tariffs had a marginal effect on inflation, if at all. WaPo loves Yellen. She was ignored for the good of the narrative.
The two reporters said your salad was going to get more expensive because Mexican tomatoes might be tariffed. They forgot to mention that Florida used to grow tons of tomatoes for the U.S. market, but that its market share has eroded due to WaPo's favorite nation: Mexico. Meaning, we are more reliant than ever on Mexico for fruit and vegetable imports, as the article sort of points out.
We have an ag commodities deficit with the world despite free trade agreements that are supposed to be so amazing. WaPo reporters should pursue those topics as follow-ons to their reporting here if they are at all curious about this.
The main problem is that WaPo's article exists to serve the purpose, like most WaPo articles on Trump, to scare readers into thinking that Trump's policies are just not for polite society. And they will hurt all you stupid plebs, to boot. You should be scared. That's the message:
"You should have never supported him. He doesn't care about you. Now your F-150 is going to cost a hundred grand. Ha ha ha! Stupid Trump supporters! Ha ha ha!"
The message is always the same with these people: If you deport a LatinX person, who will pick your strawberries (farm groups can easily get visas for that and if they dont, they better get on board); if you dont import everything so Walmart and Dollar Store can serve low-income consumers, low-income consumers will live like Tiny Tim from A Christmas Carol.
Vladimir Signorelli of Bretton Woods Research said he thinks Mexico comes to a deal before Canada. Canada barely has a government since Justin Trudeau resigned, but his party has not designated a successor yet. He is the caretaker prime minister, wounded in battle.
“I think Mexico and Canada will find a deal. (Mexican president Claudia) Sheinbaum and whoever is leading Canada will have to take Trump seriously. Trump’s speech to Davos was pretty clear: this is an America First world order. It’s about economic nationalism, energy dominance, and he doesn’t want high interest rates cutting growth around the world,” Signorelli said.
“I give Trump a B+/A- so far. It would be higher if he had his team in place. And yes, I agree, you have to give the Russians their money back. It’s very clean and Trumpian but you have to figure out a way to say that without sounding like a ‘Putin apologist’,” Signorelli said.
One way: end the war, you get your money back. Спасибо, хорошо.
Recommended reading:
“The Biodefense Oligarchy and Its Demographic Defeats” by Joe Murphy, a U.S. Marine Lt. Colonel, writing for the Brownstone Institute’s website talks about the connection between Big Pharma and the defense/intelligence apparatus in Washington. Anyone who was radicalized during the Covid years and smelled a rat in the Covid vax mandates and lockdown policies must read this essay by Murphy.
“Big Pharma is to domestic policy, what the MIC-IC is to foreign policy.” – Smarty Pants, our guy in the Faculty Lounge.
Speaking of the Faculty Lounge…
These two guys are the epitome of the intelligentsia of the old Western regime. The plebs of the post-globalist West do not want to hear this stuff anymore. This could have been written in 1988. Broken record:
Look, if you want to have the global reserve currency in a global economy and you also want an industrial base that makes airplanes and automobiles, you’re going to need tariffs.
Just wait until Chinese AI is as good as American AI and they can charge $0 a month for it. You will all be crying for service sector tariffs, like Europe. Just wait til Saks Fifth Avenue and Bergdorf Goodman close their big box stores in New York City because of e-commerce imports…It’s already happening with Macy’s.
Recommended follows:
Oren Cass is an American policy analyst, writer, and commentator known for his work on economic and social issues. He is the founder of American Compass, a think tank focused on the well-being of working-class Americans and addresses issues like globalization and the decline of Western industrial might.
By the way, the above was written by DeepSeek. Heard of it?
Follow Geiger Capital. I don’t know who is behind this account.
Have a good weekend, all.
Aún te amamos, México.
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