Another Open Letter to Trump

by Don Boudreaux on January 12, 2018

in Seen and Unseen, Trade

12 January 2018

Pres. Donald Trump
1600 Pennsylvania Ave., NW
Washington, DC  20500

Mr. Trump:

Yesterday you crowed that you’ll renegotiate NAFTA to ensure that a wall along the U.S.-Mexico border will be paid for by Mexicans.

I do wish that you’d make up your mind.  You repeatedly complain that under current NAFTA rules Mexicans export to us Americans too many goods and services – an outcome that, you insist, damages the American economy.  Yet your boast that you’re “going to take a small percentage of that money [from a renegotiated NAFTA] and it’s going toward the wall” implies that Americans will receive Mexican-produced goods and services as payment for the wall.

Undoubtedly you doubt me.  So I ask: what “money” are you talking about?  U.S. dollars?  If so, Mexicans first must acquire the dollars that you’ll get from them to pay for the wall – which means that Mexicans must sell goods and services to Americans, for it’s ultimately only through selling more to Americans that Mexicans get more dollars.  You, therefore, inadvertently endorse Mexican exports to America.

Perhaps you mean Mexican pesos?  If so, you again unwittingly commend that which in other of your comments you condemn, namely, more sales of goods and services by Mexicans to Americans.  What use, after all, do Americans have for Mexican pesos other than using them to acquire, either in the current period or in the future, more goods and services from Mexico?

The bottom line is that, ultimately, the only way that Mexicans can truly pay for your wall is for Mexicans to export more real goods and services and for Americans to import more real goods and services – outcomes that you generally (although mistakenly) regard to be in the best interest only of Mexicans and against the best interest of Americans.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030


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