Trump’s pricing switches are part of the strategy, may not bear fruit in the long term

• President Donald Trump again delayed Thursday to apply prices on Canada and Mexico for a month.
• The president of the president on international trade has caused price increases and diplomatic friction.
• Supply chain specialists say economic uncertainty is a characteristic of Trump’s trade policy, not a bug.

President Donald Trump announced on Thursday that his 25% prices on Mexico and Canada’s goods would be delayed for another month, once again returning to his aggressive international trade policy proposals.

Trump’s repeated inversions are the key to his economic strategy, although they are not paid in the long term because they erode relations with the allies, the supply chain and the scholars of the country’s conflict resolution told Business Insider.

Continuous talent has left the American economy with a feeling of cervical boost. Companies and markets must follow the latest policies in the midst of a budding trade war, while uncertainty in the greatest economy in the world makes waves in the rest of the world.

The tariff tension between North American trade partners creates diplomatic friction between the United States and its allies, in addition to conducting cost increases in industry and consumer price increases, the founding director of the University of California in southern California told Business Insider.

He said it was a characteristic of Trump’s trade policy, not a bug.

“Everyone must understand that you are on the long journey here with this jolt, it’s not just turbulence for a few seconds,” said Vyas.

Since Trump prides himself on being a negotiator, Vyas said that the president seems to believe that he will be able to achieve his political objectives by increasing pressure on Canada and Mexico – and that means keeping the head of each country unbalanced at the negotiating table.

“Everything corresponds to its American First strategy,” said Vyas. “But I think we will have to make sure not to alienate our allies.”

Although its tariff threats can be an attempt to strengthen the economic position of the United States, Trump’s repeated backwards may not help the implementation of its other long-term political priorities, the Kukin program director for the resolution of conflicts at the Cardozo School of Law told Bi.

“When you threaten and continue to recover things, obviously, the threat loses its power,” said Schneider. “Whatever the strategy message we are trying to send is confusing and is less strong because of this.”

Schneider said that mixed signals and confusing trade policies do not give companies the predictability necessary to make decisions such as hiring, expansion of research and development or the development of a new product. These factors increase market volatility, making consumers unhappy and can stimulate social disorders as the prices of daily goods continue to increase.

“The world looks at. The markets are watching,” she said. “Chaos and unpredictability could, in some cases, have meaning in diplomatic relations or individual negotiations. But this does not work in a situation like this, where each American company tries to understand what to do tomorrow and cannot predict what the policy will be.”

A price game

Thursday’s announcement is Trump’s second delay of a month since he signed decrees to make scanning prices in February. Functions – including 25% prices on Canadian and Mexican products and 10% on Chinese products – entered into force on Tuesday. Canada’s energy products have also been subjected to a separate tariff of 10%.

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China and Canada immediately retaliated Tuesday with prices on American products. Mexico said it would follow suit on Sunday, a decision that Gladys McCormick, the chair with Moskowitz in Mexican relations in the United States at the University of Syracuse, said BI was probably in anticipation of a delay in application.

“To be honest with you, I was not surprised, and I don’t think the Mexicans were surprised,” said McCormick. “This discrepancy, essentially, gives the Trump administration an out of ramp to really think about how it would be catastrophically devastating for the two countries, not only Mexico.”

Trump plays a brassard game, or pushes a risky situation on the verge of disaster before retreating in the hope of a positive result, which was an “intrinsic part of the Trump game book”, said McCormick.

“If and when Trump follows the prices, it will not be this kind of 25% basically on everything.” For example, I think that manufacturing, then in particular the automotive industry, would be so seriously struck on both sides of the border that it will be outside the table. “

“ It is really a question of political theater ”

Meanwhile, the United States and its main business partners are trapped in a Trump Battle. The president has repeatedly said that functions will help reduce immigration and fentanyl that flows through American borders. However, Christopher Tang, professor at the University of California in Los Angeles and scholar of the world management of the supply chain, told BI that he was not convinced that Trump’s main objective.

“Trump said this price was a sanction for Canada and Mexico for not having done enough to limit illegal immigration and illegal drug trade,” said Tang. However, he added that level passage rates for migrants and drugs are broken down to both borders, so he thinks that justification is “an excuse”.

Instead, Tang said he thought Trump’s prices are more likely to “close the steep door” for Chinese products using Mexico as a transition point to avoid prices. China used Mexico as a bypass solution to avoid prices by shipping semi -finished parts or products – like furniture – in Mexico, by making a final assembly in Mexico, then shipping finished products in the United States without paying its own prices, said Tang.

“If the objective is to close the hidden door to import Chinese products without paying prices, it can be effective, but the implementation can be complicated due to the volume of mass and the limited labor,” said Tang. “If the objective is to push Canada and Mexico to extend its control of illegal immigrants and illegal drugs, only time will tell us.”

Mexico, in particular, has already spent years solving the two problems by sending its National Guard to the Mexican-American border to cut immigrants and working to close fentanyl laboratories in the country, said McCormick, professor of the University of Syracuse. She added that Trump’s requests were “vague”, which was “worrying” to those who wonder when it is enough.

“The absence of measures suggests that it is not a question of fentanyl and that it is not immigration. It is really the political theater,” said McCormick.