Could the fact that Mexico has a big share of farm imports to the U.S. have an impact on supermarket inflation? Especially given promises to deport undocumented workers? (Seems like the most efficient way to do that would be to raid farms and construction sites, if you really mean it).
I'm going to steer clear of the deportation question for simplicity's sake. The post is about trade policy and I want to stick to that.
Blanket tariffs on Mexican exports would raise grocery prices, but only in the categories where Mexican production makes up the lion's share of the market. I'm thinking about the Maurer family's grocery bill. Steak, chicken, milk, bread, eggs, pasta, frozen corn, frozen peas ... no effect. What else in our personal consumption basket? Avocados, up a lot. We might just stop buying them. Tomatoes? That would be a hit, yes. Rao's pasta sauce from the old neighborhood might also get more expensive for the same reason.
But ... the Cavallo, Gopinath, Neiman, and Tang paper explained that the reason they found no impact from higher tariffs on retail prices was that retailers spread around price increases in any particular product lines to all products. That didn't increase headline inflation, but it did keep any particular product category from shooting up. Considering as Mexican exports are a tiny share of American overall consumption, if retailers do the same with future Trump tariffs then the overall price increases will be barely noticeable.
None of this applies to the effects of mass deportation on the prices of American farm goods. But I don't feel qualified to opine on that subject.
Many, many thanks for taking the time to reply, and for the data. I assume the likely devaluation would -- as you pointed out in your piece -- also sharply blunt the impact. As I live in Mexico, I assume we can potentially look forward to cheaper tomatoes -- and perhaps less environmental damage in avocado producing areas like Michoacan, which now effectively export water to the U.S. But it's interesting how much industrial exports from Mexico dwarf agricultural these days, at least in pure dollar terms. The overall economic and social shakeout would be very complex in all sorts of fields.
Considering that, though I might not have been the one who took that picture of you in the Mexico City 'burbs, I was, certainly, nearby - together with a bunch of other migrants you've spent the afternoon associating with - this is not entirely honest of you. In fact, there are even some Estonians living in those high-rises right outside the frame... And this was, certainly, nowere near Condesa, where foreign speech is now a lot more common than it was when you used to live here. Actually, anti-migrant attitudes in Mexico city are now quit strong: mostly, directed against those gringos that have made Condesa and Polanco unaffordable. If anything, I've been hearing a lot more of anger on that count, than on the count of the Haitian squatter camp in colonia Juarez - at least, the Haitians are not driving the prices up.
But, the fact is, refugee asylums have been bursting at seams for years now, the processing times for refugee status IN Mexico are growing - and that is even one is not counting numerous other "legal pathways" for residency in Mexico that have emerged in the last 5 years. We might now become the end of the road for all those who had been hoping to get further north - or even a refuge for those gringos who'd rather prefer to live in la Roma than in the brave new US. But even without that, for the last few years it has become much easier to imagine Mexico City of the 1940s, when a Mexican visa was among the most precious documents a European could hope for - and where the lucky arrival could enjoy the luxury of rationless meals. Knocking the wood....
Could the fact that Mexico has a big share of farm imports to the U.S. have an impact on supermarket inflation? Especially given promises to deport undocumented workers? (Seems like the most efficient way to do that would be to raid farms and construction sites, if you really mean it).
This is a great question!
I'm going to steer clear of the deportation question for simplicity's sake. The post is about trade policy and I want to stick to that.
Blanket tariffs on Mexican exports would raise grocery prices, but only in the categories where Mexican production makes up the lion's share of the market. I'm thinking about the Maurer family's grocery bill. Steak, chicken, milk, bread, eggs, pasta, frozen corn, frozen peas ... no effect. What else in our personal consumption basket? Avocados, up a lot. We might just stop buying them. Tomatoes? That would be a hit, yes. Rao's pasta sauce from the old neighborhood might also get more expensive for the same reason.
But ... the Cavallo, Gopinath, Neiman, and Tang paper explained that the reason they found no impact from higher tariffs on retail prices was that retailers spread around price increases in any particular product lines to all products. That didn't increase headline inflation, but it did keep any particular product category from shooting up. Considering as Mexican exports are a tiny share of American overall consumption, if retailers do the same with future Trump tariffs then the overall price increases will be barely noticeable.
None of this applies to the effects of mass deportation on the prices of American farm goods. But I don't feel qualified to opine on that subject.
Many, many thanks for taking the time to reply, and for the data. I assume the likely devaluation would -- as you pointed out in your piece -- also sharply blunt the impact. As I live in Mexico, I assume we can potentially look forward to cheaper tomatoes -- and perhaps less environmental damage in avocado producing areas like Michoacan, which now effectively export water to the U.S. But it's interesting how much industrial exports from Mexico dwarf agricultural these days, at least in pure dollar terms. The overall economic and social shakeout would be very complex in all sorts of fields.
Considering that, though I might not have been the one who took that picture of you in the Mexico City 'burbs, I was, certainly, nearby - together with a bunch of other migrants you've spent the afternoon associating with - this is not entirely honest of you. In fact, there are even some Estonians living in those high-rises right outside the frame... And this was, certainly, nowere near Condesa, where foreign speech is now a lot more common than it was when you used to live here. Actually, anti-migrant attitudes in Mexico city are now quit strong: mostly, directed against those gringos that have made Condesa and Polanco unaffordable. If anything, I've been hearing a lot more of anger on that count, than on the count of the Haitian squatter camp in colonia Juarez - at least, the Haitians are not driving the prices up.
But, the fact is, refugee asylums have been bursting at seams for years now, the processing times for refugee status IN Mexico are growing - and that is even one is not counting numerous other "legal pathways" for residency in Mexico that have emerged in the last 5 years. We might now become the end of the road for all those who had been hoping to get further north - or even a refuge for those gringos who'd rather prefer to live in la Roma than in the brave new US. But even without that, for the last few years it has become much easier to imagine Mexico City of the 1940s, when a Mexican visa was among the most precious documents a European could hope for - and where the lucky arrival could enjoy the luxury of rationless meals. Knocking the wood....