Donald Trump takes it to Mexico but his real fight is at home | Phillip Inman | Business

reOne can better understand Trump's threats of increased import tariffs on Mexican products, not as an escalation of his trade war with the rest of the world, but as the gesture of a desperate man ready to annoy most American business leaders to achieve its goal. building a wall border with the country's southern neighbor.

His anger, which he will bring with him during a state visit to London on Monday, does not concern so much the administration of Andrés Manuel López Obrador in Mexico City as the Congress that blocked the wall of the border, or at least limited funding for such events. that its completion is unlikely before the start of the next presidential race.

As a frustrated bull, provoked by his new Democrat masters in the House of Representatives, he goes beyond aggressive tactics perfected in his reality show, The Apprentice, which he animated during his 14 first seasons. Trump is now fighting with a flawless show of belligerence that seems to indicate to Democrats in the House that he is ready to destroy his own mini-economic boom to secure victory.

No wonder investors spent Friday looking for paradise in global markets. The presidential decision appeared clear Thursday in the clear skies of Washington late in the shock and consternation of traders, who especially bet that Trump was completely braggart and soon find the way to win the victory through modest concessions resulting from its many battles against trade.

Frightened by the prospect of reduced growth due to higher tariffs, they returned to the security of German bonds.

Trump, we must not forget, has already concluded a commercial agreement with López Obrador, nicknamed Nafta 2.

It is a slightly redesigned version of the first trade agreement between the Nafta and Canada and Canada, which, according to Trump, will benefit American workers.

The agreement, he said in his state of the union address earlier this year, will help American farmers and workers and will guarantee "that more cars proudly carry the four beautiful words: Made in the USA ".

The problem for him is that, as for his request for a border wall, the Nafta 2 agreement is also blocked in Congress.

A large number of US business leaders, upset by the additional costs of increasing tariffs on imported products, have pointed to the contradiction in Trump's argument that NAFTA 2, supposedly exchange, adds to the punitive tariffs put in place to combat migration.

López Obrador was particularly furious after presenting the Nafta 2 bill to the Mexican parliament on Thursday, just half an hour before Trump proposed to introduce new tariffs, which would start at 5% on all Mexican exports to the states. United States from June 10th. , before further monthly increases that could bring the total to 25% by October.

The Mexican president will probably have to make concessions to persuade Trump to back down. It is in a difficult position when trade with the United States is the engine of the Mexican economy. There will undoubtedly be proposals in the coming days for stronger migration rules. López Obrador made the remarks in a speech made a day later in Veracruz, in the east of the country, after calming down.

However, it's hard to see what he can do when the real Trump battle is against Nancy Pelosi at home. She plays a game with Trump a bit like a toreador playing with his prey, frustrating him with objections eloquently argued at each of his initiatives, rather than trying his luck.

Pelosi is under pressure from his left flank to act more forcefully against Trump and, in particular, to start an impeachment procedure. Alexandria Ocasio-Cortez is one of many Leftists who wish to act more quickly against the President to remove him from office without further delay.

This is not the way of Pelosi. In anticipation of next year's race, Democratic leaders have decided that the best tactic would be to provoke Trump and turn him into a wounded beast and unable to see through the red haze, hitting his friends and enemies while trying to keep at a distance. defeat.

Given that Trump, in the 1990s, had not won his battles with banks and other lenders of his real estate empire, so he had been forced to declare bankruptcy, the best of plans is to threaten him with his defeat.

Unfortunately, the lives of exporting companies in the global economy could become very difficult.

The additional tariffs on Chinese products are already depressing trade between the two largest economies in the world. The European economy is slowing down after a recovery almost completely dependent on German expansion, which is itself based on exports to China, which have now slowed down.

Oil prices fell to nearly $ 60 a barrel as they were heading to $ 80 just a few weeks ago. And the stock markets are in decline.

Some governments will also be exposed to declining trade, especially those that have borrowed heavily in recent years. Without trade revenues, they will struggle to pay their debts and could default.

Already, the International Monetary Fund, acting as the lender of last resort for member countries, is talking to South American and African leaders about the need for emergency loans if the Trump intensify, tariffs are multiplying and trade growth is stagnating.

The situation could become ugly, especially as populist movements multiply and campaign, like the American president, for the sense of national identity to become an expression of self-interest.

Trump knows that the tax cuts that he has imposed on Congress in his first year of service are now just a distant memory.

His audience needs fresh meat and, with a national agenda blocked in Congress, he must use all the executive powers at his disposal to defeat his Democratic enemies.

In a long line of presidential battles with Congress, this one is defined by Hemingway-esque for the time it will take to play and its emotional intensity. European leaders should join Pelosi's efforts, frustrating Trump whenever they can, angering him until he is bankrupt again, without friends and without function.