Markets are back in rally mode now that President Trump has managed to strike a deal with Mexico (which the New York Times and other members of the liberal press have dismissed as a fraud).
But without getting into to many of the details, Trump revealed via Twitter on Monday that the two sides had “signed and documented another very important part of the immigration and security deal with Mexico.” The details of the plan will be revealed in the “not too distant future”.
Now with our new deal, Mexico is doing more for the USA on Illegal Immigration than the Democrats. In fact, the Democrats are doing NOTHING, they want Open Borders,
which means Illigal Immigration, Drugs and Crime.— Donald J. Trump (@realDonaldTrump) June 10, 2019
We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the U.S. has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s Legislative body!..
— Donald J. Trump (@realDonaldTrump) June 10, 2019
….We do not anticipate a problem with the vote but, if for any reason the approval is not forthcoming, Tariffs will be reinstated!
— Donald J. Trump (@realDonaldTrump) June 10, 2019
According to a team of analysts at Goldman Sachs, while the new agreement is better than tariffs, it is not a free lunch for Mexico, which is perhaps why the peso has not held on to the pre-Trump-tariff warning levels…
The agreement will have “fiscal implications, and may over time also have economic, social, security and political implications for the AMLO administration, including…”
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Mexico will have to allocate extra budgetary resources for border control and overall migration law and order enforcement.
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Mexico committed to grant some work permits and to house, feed, and provide healthcare and education to an unspecified number of migrants seeking asylum in the US that will be returned to Mexico. The Mexican authorities will likely have to set up facilities in the north of the country to accommodate the asylum seekers and to provide for their security (many of the border towns are already dealing with serious violence and security issues).
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If, as seems likely, the number of Central American migrants waiting for the adjudication of US asylum claims grows, there is the risk of tensions in Mexican border communities, as this could put pressure on local social services and stretch local governments’ capacity to attend to the local and arriving communities. Furthermore, diverting limited security forces and law and order assets to both borders may leave other parts of the country thin and exposed in term of security. Overall, beyond the economic costs, the concession made by the Mexican authorities could also be politically costly for President Lopez Obrador, whose political support base is not particularly engaged on Central America asylum and migration to the US issues.
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The tariffs issue is likely not dead, just dormant. If the Mexican authorities fail to adequately enforce the agreement and/or change the situation at the border in a way that is deemed satisfactory for the US, the threat of punitive tariffs, or other actions, could return. In this regard, US Treasury Mnuchin stated that President Trump will “retain authority to impose tariffs if Mexico fails to live up to immigration deal commitments”. The risk of a resurgence of the immigration and tariffs issue could increase as the US election dynamics intensify.
Of course, if the New York Times’ reporting is accurate, than all of these issues were really laid out months ago, and the tariff debacle was little more than a publicity stunt – a notion that President Trump deeply resents.
via ZeroHedge News http://bit.ly/2WrF86a Tyler Durden