2/14/2017 Harvard Business Review
President Trump campaigned on a promise to “build a great, great wall on our southern border.” After he was inaugurated as president, his administration said it was considering taxing imports from Mexico to cover the estimated cost of $21.6 billion. (That Department of Homeland Security estimate is roughly double Trump’s price tag of $8–$12 billion; others peg the cost much higher). Many economists were quick to note how such a tax would raise the cost of Mexican goods in the United States and violate Trump’s other campaign promise to “make Mexico pay.” In practice, Americans would pay twice: up front for the wall, and again in the form of higher prices for Mexican goods.
It’s not realistic to erect a physical barrier and to shove the costs on a top trading partner without weakening your own economy and putting in jeopardy the 1.1 million American jobs that depend on that trade. But we could use economic forces, rather than flying in the face of them. What the United States needs are smart economic policies that disrupt the market forces that are currently driving undocumented immigration.