In a surprise announcement that could compromise a major trade deal, US President Donald Trump on Thursday announced that he would slap a 5 percent tariff on all Mexican imports, effective June 10, to pressure the country to do more to crack down on a surge of Central American migrants trying to cross the US border.
The percentage would gradually increase — up to 25 percent — “until the illegal immigration problem is remedied,” he said.
The decision showed that the administration is going to new lengths, and looking for new levers, to pressure Mexico to take action — even if those risk upending other policy priorities, such as the US-Mexico-Canada Agreement (USMCA), a trade deal that is the cornerstone of Trump’s legislative agenda and beneficial to his re-election effort.
Trump made the announcement by tweet after telling reporters earlier on Thursday that he was planning “a major statement” that would be his “biggest” so far on the border.
The Mexican peso weakened by as much as 3 percent after Trump’s tweets, while investors fled to the safest assets as concerns over new trade conflicts mounted.
“On June 10th, the United States will impose a 5 percent Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed,” Trump wrote on Twitter.
Trump has accused the Mexican government of failing to do enough to halt the flow of asylum seekers from countries including El Salvador, Honduras and Guatemala.
The president has been itching to take increasingly radical, headline-grabbing action on the issue, which he sees as critical to his campaign for re-election because it energizes his base.
However, the sudden tariff threat comes at a peculiar time, given how hard the administration has been pushing for passage of the USMCA, which would update the North American Free Trade Agreement.
It comes less than two weeks after Trump lifted import taxes on Mexican and Canadian steel and aluminum, a move that seemed to clear an obstacle to passage of his North American trade deal, and the same day that the Mexican government and the Trump administration began the process of seeking ratification.
The deal needs approval from lawmakers in all three countries for it to be ratified.
On a briefing call with reporters on Thursday evening, US officials said there were several things Mexico could do immediately to prevent the tariffs from kicking in, including securing their southern border with Guatemala and entering into a “safe third country agreement” that would make it difficult for those who enter Mexico from other countries to claim asylum in the US.
“We’re going to judge success here by the number of people crossing the border and that number needs to start coming down immediately, in a significant and substantial number,” Acting White House Chief of Staff Mick Mulvaney said.
He also said that tariffs were “completely” separate “and apart from the USMCA,” because one pertained to trade and the other immigration.
“The two are absolutely not linked,” Mulvaney said.
In Mexico, trade negotiator Jesus Seade responded with a mix of alarm and dismissal. He called the matter “most serious,” but also downplayed the likelihood the tariffs would go into effect.
“It is no secret to anyone that Trump is very active in his use of Twitter and he launches many tweets that are later changed,” he said.
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