Trump Just Reopened a Wound With Mexico: Balance of Power

(Bloomberg) --

Donald Trump is making Mexico pay — just not for his promised border wall.

The U.S. President has vowed to impose a 5% levy on Mexican goods until it stops immigrants from entering the U.S. illegally. It reflects Trump’s increased use of tariffs as a weapon to achieve non-economic foreign policy goals with allies and foes alike.

The tariff would take effect on June 10, “until such time as illegal migrants coming through Mexico, and into our country, STOP,” Trump said in a Twitter post. The levy could rise as high as 25% on Oct. 1, he added in a statement released by the White House.

Trump’s been frustrated in his efforts to obtain funding for a big border wall with Mexico. For him, marrying two signature issues — trade and immigration — may make sense as he ramps up his campaign for re-election in 2020.

But while it may pay off at home with voters, his gambit, which is likely to draw legal challenges, could cause problems elsewhere, which is why it has sparked unease in markets: It jeopardizes a new North American trade agreement with Mexico and Canada that still needs to get through Congress. It picks a fight with a new leader in Mexico who has tried to avoid the confrontations of his predecessor.

Trump’s combative mood could also lessen the chances of a breakthrough in his trade war with Beijing. And, it may even deprive Americans of their beloved avocados.

Global Headlines

Just in: China will add foreign companies that cut supplies to Chinese firms to an “unreliable entities” list, state radio reported, citing Ministry of Commerce spokesman Gao Feng.

Economic challenges | A bigger-than-expected slowdown in China's manufacturing adds to the headaches — including anxious markets and the first government seizure of a Chinese bank in 20 years — lining up for Xi Jinping amid his trade war with the Trump administration. The Chinese president faces the task of standing firm against Trump while supporting growth and avoiding a debt blowout.

Envoy mystery | Pyongyang’s point man for nuclear talks with the U.S. was executed by firing squad about a month after Kim Jong Un’s talks with Trump broke down in Hanoi in February, South Korea's Chosun Ilbo newspaper reported. Career diplomat Kim Hyok Chol has been absent from mentions in North Korea’s state media since the summit, though Seoul’s presidential office suggested that reports of his demise should be treated with some skepticism as news from its reclusive neighbor is notoriously unreliable.

Salvini's rules | Italian Deputy Prime Minister Matteo Salvini told his lawmakers that fractious coalition partner Five Star must accept his policy agenda or he’s ready to bring down their government. As John Follain reports, Salvini is looking to impose his will on the administration after a strong showing by his right-wing party in last Sunday’s European parliamentary elections. Anti-establishment Five Star saw its vote halved.

The Golden State | Most of the Democratic presidential hopefuls are converging on San Francisco this weekend in their biggest single gathering so far this year. They’re bidding for advantage in a state that’ll play a pivotal role early in the 2020 race with its March 3 primary. The notable exception is Joe Biden, who will speak at a Human Rights Campaign fundraiser tomorrow in Ohio. 

Netanyahu’s nemesis | Avigdor Liberman, the blunt-talking former bouncer who engineered Benjamin Netanyahu’s first electoral victory in Israel in 1996, has come back to haunt his former ally. His proposals to draft ultra-Orthodox men into the army collapsed the premier’s attempts to build a fifth government. Israelis will vote again in September. But Liberman is looking further ahead — he aspires to one day lead the nation.

What to Watch

• U.S. Secretary of State Michael Pompeo meets today with German Chancellor Angela Merkel and Foreign Minister Heiko Maas in Berlin to discuss potential collaboration on issues such as Iran.
• Italy is expected to tell the European Commission in a letter today that any budget tightening this year would jeopardize a sluggish recovery, in reply to a demand from Brussels to explain its increasing debt load.

And finally...Hillary Clinton’s setting up her next act — in Hollywood. The former first lady, senator, secretary of state and 2016 Democratic presidential nominee is forming a production company with daughter Chelsea. They plan to focus on stories by and about women. Clinton previously signed on to help produce a TV show with Steven Spielberg about activists who fought to earn women the right to vote.

--With assistance from Karl Maier, Ben Sills, Karen Leigh, Jon Herskovitz and Mark Williams.

To contact the editor responsible for this story: Rosalind Mathieson at

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