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Taxes and tariffs: The White House hints that tax reform could pay for the border wall

The Economist on Mexico - Thu, 01/26/2017 - 22:58
Main image:  MAKING Mexico pay for a border wall was Donald Trump’s flagship campaign promise. Already, it has caused a diplomatic crisis. On January 26th Enrique Peña Nieto, Mexico’s president, pulled out of a scheduled summit with Mr Trump, who had earlier suggested that if Mexico was not going to pay for the wall, then there was no point in having the meeting. Then, for a brief moment, it looked as if the White House was declaring a trade war, when reports surfaced on Twitter that the Sean Spicer, the White House Press Secretary, had said that a 20% tariff on Mexican imports would raise the necessary funds.Those reports, it turned out, were not quite right. Mr Spicer in fact suggested that a deal was nearing on corporate tax reform. He implied that it would include the so-called "border-adjustment” Republicans in the House of Representatives have long sought. That change could pay for the wall, he said. (He later told a reporter he was only discussing “possible” policy moves).Border-adjustment would change the way firms calculate their profits for tax purposes. Revenue made from exports would no longer count. Neither would costs incurred by importing goods. In short, exports would be subsidised, and imports taxed.Crucially, most economists do not view border-adjustment as a barrier to trade. In ...
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Daily Chart: How necessary is Donald Trump′s wall?

The Economist on Mexico - Thu, 01/26/2017 - 19:26
Main image:  DONALD TRUMP launched his presidential campaign with a promise to build a wall along the United States-Mexico border in order to stem the tide of undocumented immigration. In fact, those flows were already in steep decline long before he introduced the proposal. The number of apprehensions of people attempting to cross illegally peaked in 2000, when America′s Border Patrol made more than 1.6m arrests, over 98% of which were of Mexicans. Over the course of George W. Bush′s administration, this number dropped to around 1m annually. During Barack Obama′s presidency, the rate fell even more precipitously, averaging just 400,000 a year. Moreover, in 2016, only 47% of the apprehensions involved Mexicans.Counting arrests does not necessarily yield a reliable estimate of the number of border-crossers who evade detection. The authorities′ rate of success at catching illegal immigrants can vary, and they may wind up detaining the same people multiple times. Nonetheless, the Pew Hispanic Centre estimates that the total who do make it through has fallen as well, to less than a third of its maximum level.The causes of this decline are open to debate. In the early 2000s, Republican politicians from border states lobbied the federal government to build a fence. In response, Congress authorised the ...
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Pistols drawn: The diplomatic meaning of El Chapo’s extradition

The Economist on Mexico - Thu, 01/26/2017 - 15:44
Print section Print Rubric:  Security co-operation across the Rio Grande works well. That could change Print Headline:  Pistols drawn Print Fly Title:  Mexico and the United States UK Only Article:  standard article Issue:  The multinational company is in trouble Fly Title:  Pistols drawn Location:  MEXICO CITY Main image:  20170128_AMP001.jpg ONE Mexican whom Donald Trump is unlikely to deport is Joaquín Guzmán, better known as El Chapo (Shorty). The Mexican government put Mr Guzmán, the chief of the Sinaloa drug-trafficking gang, on an aeroplane to New York on January 19th, the last full day of Barack Obama’s presidency. He will stand trial on charges ranging from money-laundering to murder, to which he has pleaded not guilty. If convicted, he will probably spend the rest of his life in an ...
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President’s orders: Donald Trump gets serious about building a border wall

The Economist on Mexico - Thu, 01/26/2017 - 02:37
Main image:  UNTIL the first days after his inauguration, Donald Trump's adversaries and even some of his supporters thought that, once in power, he would back away from many of his most contentious policy proposals. Rahm Emanuel, the Democratic mayor of Chicago, recently said that he thought building a wall on America’s southern border would not be a priority for the new president. This has turned out to be wishful thinking. On January 25th Mr Trump signed a pair of executive orders that mandate the building of the wall as well as increasing the number of border-police officers by 5,000 and immigration-enforcement officers, who deport illegal immigrants, by a whopping 10,000. The orders also called for cutting federal funding of sanctuary cities, like Chicago, which protect illegal immigrants from deportation.Mr Emanuel reacted almost immediately. “I want to be clear: We’re gonna stay a sanctuary city. There is no stranger among us. We welcome people—whether you’re from Poland or Pakistan, whether you’re from Ireland or India or Israel and whether you’re from Mexico or Moldova where my grandfather came from. You are welcome in Chicago as you pursue the American dream,” he said at a news conference after a city council meeting. Mr Emanuel is not alone in his defiance. The mayors of Los Angeles, ...
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The Economist explains: How Trump could take America out of NAFTA

The Economist on Mexico - Mon, 01/23/2017 - 08:30
Main image:  DONALD TRUMP has consistently slammed the North American Free-Trade Agreement (NAFTA). He has called it “the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country”. He blames it for the loss of America’s carmaking jobs, a quarter of which have vanished since 1994. And he promises to renegotiate or even withdraw from the deal. Could Mr Trump take America out of NAFTA, and what would be the consequences if he did?Perhaps the biggest question about the incoming administration since the election is whether the president-elect intends to pursue his campaign agenda, or whether he was simply using the rhetoric he needed to get himself elected. On outsourcing jobs, Mr Trump has been consistent. In recent weeks, using his Twitter account, he has pressured Carrier, a manufacturer of air-conditioners, to maintain a factory in Indianapolis that it had planned to relocate to Mexico—preserving around 800 jobs. One of America’s biggest carmakers, Ford, scrapped a plan to build a new plant in Mexico a month later, instead announcing it would also invest $700m on a new venture in Michigan to build electric cars. Mr Trump has also threatened GM and Toyota with a “big border tax” if the companies export Mexican-assembled vehicles into America. Tariffs would violate ...
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Bracing for impact: Donald Trump’s presidency is about to hit Mexico

The Economist on Mexico - Thu, 01/12/2017 - 15:54
Print section Print Rubric:  Dealing with the consequences of Donald Trump Print Headline:  Bracing for impact Print Fly Title:  Mexico and the United States UK Only Article:  standard article Issue:  Equipping people to stay ahead of technological change Fly Title:  Bracing for impact Location:  PUEBLA Main image:  20170114_AMD001_0.jpg WHEN an asteroid hit Earth 66m years ago, wiping out the dinosaurs and 75% of plant and animal species, it hurt Mexico first. Donald Trump’s inauguration is far less frightening, but Mexicans can talk of little else. Outside a massive Volkswagen (VW) factory in Puebla, two hours’ drive from Mexico City, workers fret about Mr Trump’s threats to whack big tariffs on cars made in Mexico. One American carmaker—Ford—cancelled plans to build a $1.6bn plant in San Luis ...
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Dealing with Donald: How Mexico should handle Trump

The Economist on Mexico - Thu, 01/12/2017 - 15:54
Print section Print Rubric:  How Mexico should deal with the threat from America’s new president Print Headline:  Handling a bully Print Fly Title:  Trump and Mexico UK Only Article:  standard article Issue:  Equipping people to stay ahead of technological change Fly Title:  Dealing with Donald Main image:  20170114_LDD002_0.jpg AMERICA’S allies and trading partners await Donald Trump’s arrival in the White House on January 20th with trepidation. None is more anxious than Mexico. Mr Trump began his election campaign by damning Mexicans as rapists and killers of American jobs. He has repeatedly threatened carmakers that invest in Mexico with import tariffs. Ford cancelled plans to build a $1.6bn plant there. He renewed his vow to make Mexico pay for his border wall at a press conference on January 11th. “Mexico has taken advantage of the United States,” he ...
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Podcast: Money Talks: Turbulence Ahead

The Economist on Mexico - Tue, 01/10/2017 - 17:04
20170110 16:41:12 Comment Expiry Date:  Wed, 2017-01-25
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Wheel spin: Ford Motors courts Donald Trump by scrapping a planned plant in Mexico

The Economist on Mexico - Thu, 01/05/2017 - 15:42
Print section Print Rubric:  Ford Motors cancels a new plant in Mexico Print Headline:  Wheel spin Print Fly Title:  Donald Trump and business UK Only Article:  standard article Issue:  The indecisive prime minister Fly Title:  Wheel spin Main image:  20170107_WBD001_0.jpg IT WAS in the spring of 2016 that Donald Trump singled out Ford Motors, calling its plans to build a plant in Mexico an “absolute disgrace” and promising it would not happen on his watch. Back then, it seemed remarkable that the candidate thought he could boss around a firm of Ford’s stature. On January 3rd Ford cancelled its $1.6bn project in the Mexican state of San Luis Potosí and said it would instead invest $700m into an existing plant in Flat Rock, Michigan, to build electric and autonomous cars. Ford’s manoeuvre seems more wheel-spin than U-turn. Mr Trump’s strong-arming of corporate ...
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The world this week

The Economist on Mexico - Thu, 01/05/2017 - 15:42
Print section Print Headline:  The world this week UK Only Article:  standard article Issue:  The indecisive prime minister Barack Obama expelled 35 Russian diplomats and imposed new economic sanctions in retaliation against Russian hackers’ interference in America’s election. American intelligence agencies say that Russia released stolen e-mails of Democratic Party officers in order to aid the campaign of Donald Trump. Vladimir Putin declined to strike back, winning praise from Mr Trump. See article. A gunman attacked a nightclub in Istanbul during New Year’s Day festivities, killing at least 39 people. Islamic State claimed responsibility. Turkish religious authorities who had criticised new year’s celebrations as un-Islamic condemned the attack. It came two weeks after a policeman shouting “Don’t forget Aleppo!” fatally shot the Russian ambassador to Turkey. See article. Relations between Israel and America became strained when John Kerry, the soon-to-retire secretary of state, said that the Israeli government was undermining the prospects for a “two-state solution” with the Palestinians. His comments came soon after America ...
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Daily chart: Remittances to Mexico spike in anticipation of Donald Trump’s wall

The Economist on Mexico - Thu, 01/05/2017 - 14:50
DONALD TRUMP’S signature campaign promise was to build a “big beautiful wall” along America’s southern border to keep out undocumented immigrants. The chief source of funding, he reckons, will be a one-time payment of $5bn-10bn from Mexico. A campaign memo released in April 2016 says the Trump administration will force Mexico to stump up by threatening to block money transfers from undocumented Mexicans living in the United States. This would be “an easy decision for Mexico” according to the memo. Indeed, Mexico received nearly $25bn in remittances in 2015 according to its central bank, equivalent to 2.3% of the country’s GDP. Over 98% of these remittance payments came from the United States.But there are serious cracks in Mr Trump’s plan. First, blocking certain remittance payments requires the Patriot Act to be rewritten, which needs legislative action by Congress and would probably be challenged in court. Many experts also point out that such a rule would introduce new costs for all non-citizens transferring funds abroad, not just those sending money to Mexico. Finally, a new rule blocking money transfers from illegal immigrants would likely push these transactions underground, creating a black market for remittances and making such payments more difficult for government authorities to track.However, some are not taking any chances. In November, remittances to ...
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The hypocrites’ club: Poor countries need to allow more immigration, too

The Economist on Mexico - Tue, 12/20/2016 - 15:47
Print section Print Rubric:  The West’s immigration policies are restrictive. Those of developing countries are sometimes worse Print Headline:  The hypocrites’ club Print Fly Title:  Developing-country migration UK Only Article:  standard article Issue:  How to make sense of 2016 Fly Title:  The hypocrites’ club Main image:  20161224_LDP001_0.jpg A POLITICAL brain teaser: which party in which country has promised “punitive measures” against illegal immigration, has threatened to disenfranchise people who arrived half a century ago and has told migrants to “be prepared with their bags packed”? The answer is not the National Front of France, the United Kingdom Independence Party, Jobbik of Hungary or indeed any other insurgent political party in the West. It is the ruling Bharatiya Janata Party of India. The BJP and its leader, Narendra Modi, rail against ...
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Northern lights: Mexican attitudes to marijuana mellow

The Economist on Mexico - Tue, 12/20/2016 - 15:47
Print section Print Rubric:  Mexican attitudes to cannabis are mellowing as America liberalises Print Headline:  Northern lights Print Fly Title:  Marijuana in Mexico UK Only Article:  standard article Issue:  How to make sense of 2016 Fly Title:  Northern lights Location:  MEXICO CITY Main image:  20161224_AMD001_0.jpg IN NOVEMBER 57% of Californians voted to legalise the growing and use of marijuana for recreational purposes. Americans in seven other states and Washington, DC, are now, or soon expect to be, free to puff away at leisure, but liberalisation in the most populous border state will be felt acutely down south. Mexico has just marked the tenth anniversary of a war on drugs. It has spent millions of dollars on eradicating cannabis. Now it will abut a huge regulated market for the ...
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Hamilton’s heirs: Donald Trump’s administration could deport millions of undocumented immigrants, using a system perfected under Barack Obama

The Economist on Mexico - Thu, 12/08/2016 - 15:55
Print section Print Rubric:  The president-elect could deport millions of people who arrived illegally, using a system perfected under the outgoing president Print Headline:  Hamilton’s heirs Print Fly Title:  Deporting undocumented migrants UK Only Article:  standard article Issue:  How Donald Trump is changing the rules for American business Fly Title:  Hamilton’s heirs Main image:  20161210_USP006_0.jpg WHEN she was seven Greisa Martinez moved illegally from Hidalgo, in Mexico, to Dallas with her parents. Now aged 28, Ms Martinez works for United We Dream, an immigration advocacy group. Following the election of Donald Trump she has been busy. In case of an immigration raid, she instructs her charges not to open their doors to immigration officials unless they have a court-ordered warrant, and to remain silent until speaking with a lawyer. Ms Martinez is one ...
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Dealing with Donald: Donald Trump’s trade bluster

The Economist on Mexico - Thu, 12/08/2016 - 11:03
Print section Print Rubric:  The president-elect wants to change the landscape of American business. The first of two pieces looks at his trade proposals Print Headline:  Dealing with Donald Print Fly Title:  Business in America UK Only Article:  standard article Issue:  How Donald Trump is changing the rules for American business Fly Title:  Dealing with Donald Main image:  20161210_FBD003_0.jpg IN A YouTube video released on November 22nd, Donald Trump—seated in front of an American flag and a leonine statue—confirmed his plan to put America first, “whether it’s producing steel, building cars or curing disease”. Mr Trump has already arm-twisted Carrier, a maker of airconditioning units in Indiana, to keep 800 jobs in the state rather than move them to Mexico. His transition team is preparing a list of “executive actions we can take on day one to restore our ...
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