Thursday, March 19, 2009

Democrats: We'll Improve Economy By Setting Off Trade War

The U.S. closed the southern border to Mexican trucking last week, a violation of the North American Free Trade Agreement.

Yesterday, Mexico retaliated by raising tariffs on nearly 100 U.S. products. The new tariffs will range from 10% to 45%.

Even though a pilot program proved that Mexican carriers are as safe as any on U.S. roads, the Teamsters union demanded that Democrats kill the program.

The Democrat-controlled Congress obliged last week and Mexico's retaliation was swift.

Trade wars can be devastating to an economy. The Depression-era Smoot-Hawley Act resulted in a catastrophic decline in exports.

After it became law, exports declined dramatically and unemployment rose from 3.2 percent in 1929 to 8.7 percent in 1930 and peaked at 24.9 percent in 1933.

Mexico is America's third largest trading partner and the new tariffs will affect around $2.5 billion in goods scattered throughout this country.

California's economy will be especially affected. Its exports of fruits, nuts and Christmas-trees will be hit with tariffs of between 20% to 45%. Oregon will be similarly affected.

Washington state will also suffer at the hands of the Teamsters. 40% of all American pears go to Mexico and will now face a 20% duty.

Wisconsin exports $128 million annually to Mexico, to which it must now add $25 million in tariffs.

New York's $275 million in exports will be likewise hit with duties of over $55 million.

Illinois ships roughly $120 million in goods to Mexico and must pony up about $24 million extra.

With the costs of these goods now priced uncompetitively for Mexican businesses, they will substitute alternative products from Canada, Europe and Latin America.

U.S. exporters will suffer because of the Democrats' willingness to sell their souls to the Teamsters. The results are easy to predict: increased unemployment, reduced household incomes, and more mortgage foreclosures.

In other words: change.

Based upon: Mexico Retaliates.

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