all right we're trying to drone today uh today is part two of the Trump's tariff Series yesterday we covered China and discussed how what Trump is achieving there is an industrial reorganization and terrorists may actually in the right policy combination work for that uh that's very different from what's going on with Mexico and Canada Mexico and Canada are number two and number one trading partners collectively if the tariffs that Trump says he's going to put on actually happen and there is no retaliation we're looking at something along the lines of roughly a $1,500 hit to
every man woman and child in the United States so potentially big it'll hit some Industries more than others Automotive is definitely the one that will get hit the most because there's a lot of products especially in US Mexico trade where intermediate products go back and forth and back and forth and back and forth across the border and the uh administrative cost of imposing a single 25% would be huge it would be easier just to do every time something crosses so all of a sudden you're in5 to $10,000 to the cost of a vehicle that is
made in North America so it's an inflationary issue it's an employment issue it's an industry issue and there is no version of the future of the United States uh that is post China that does not involve Mexico and Canada very very strongly and keep in mind that Trump put his name on the most recent trade deal with both countries that's NA two so potentially very very very big however what Trump is attempting to achieve with Mexico and Canada is not the same as what he's trying to achieve in China in China he's actually trying to
move industry he doesn't seem to have a problem with the manufacturing Supply chains we have here in North America his concern is he wants to use the lever or the hammer of trade and tariffs to get progress in his view on immigration on migration and especially on fenel and so basically it's an if this then that now that's not a crazy idea in fact there is a couple of reasons to expect it to work uh first off that's the whole concept of globalization and the cold war is that the United States used its Navy to
patrol the global oceans to force open International Trade including our own market and we would do this for you if in exchange you would allow the United States to write your security policies and that was the policy WR up until 1992 now we got away from that in the post Cold War era where free trade became a goal in of of itself Trump basically wants to dial the clock back 35 years and start renegotiating what security policies mean to include migration and fentol and the idea that you can do that makes a lot of sense
because the United States is the only large Rich consumption L economy on the world and that means that the US president whoever that happens to be has a huge amount of negotiating room to get what he wants whatever the issue happens to be so you want access to this Market that's fine you have to do XYZ a BN C and you have to do that maybe first the question is time frame in the case of Mexico it's probably going to work because it's worked before in Trump's first term he tried something very similar on migration
issues and forced a deal with the then President loopez oor we now have a new president Claudia Shin bom uh who is much better at bath than her predecessor so it's just a question of how these two ultimately do or do not get along in the case of Canada it's probably going to be a little bit more sticky the ruling government of Justin Trudeau is a minority government it is in trouble it is not popular it faces election next year and capitulating to Donald Trump is generally not a great way to win accolades with leftist
supporters so we might actually see relations with the United States uh between the United States and Mexico stumble forward in its own way and relations between the United States and Canada suffer but a much bigger issue is whether or what Trump is wanting to do with Mexico and Canada can actually work there are ways that Mexico in particular can cooperate with the United States on migration that has happened in the past I'm sure it will happen again in the future but fentel is different Trump's understanding of fentanyl is that the precursor materials come from China
whereas they turn to finish drugs in Mexico and then they cross the border of the US and that's accurate but it's an incomplete understanding because fentanyl is different from cocaine cocaine is a very specific spefic economics and geography of production and transport than fentol does and so to understand the pros and cons of what Trump is trying to achieve with trade policy we need to look at the supply chain for fentol and you can see then how things might work a little bit differently that's going to take a whole another video we will tackle that
tomorrow but
