Trade Groups, Lawmakers Deride Trump’s Mexico Tariff Plan

A row of trucks wait to cross the border with the United States in Ciudad Juarez, Mexico, Tuesday, April 9, 2019.

A row of trucks wait to cross the border with the United States in Ciudad Juarez, Mexico, Tuesday, April 9, 2019. Christian Torres/AP Photo

 

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The escalation of tariffs would add $17 billion in new taxes at the 5 percent rate and $86 billion at the 25 percent rate.

President Trump’s plan to impose tariffs on all goods imported from Mexico will cost American consumers and jeopardize future trade negotiations, said trade associations and lawmakers reacting to Thursday’s surprise announcement.

Trump’s proposal—which the president first announced on Twitter—would impose an escalating series of tariffs on Mexican imports in response to the swell of migrants crossing the southern border into the United States. A 5 percent tariff on all Mexican imports would take effect June 10 and increase to 10 percent on July 1 if Mexico fails to curtail the influx of illegal immigration, according to a statement issued by the White House. Tariffs would increase incrementally each month until they hit 25 percent on October 1 and remain at that level “unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” the White House said.

At 5 percent, the tariffs equate to $17 billion in new taxes and would rise to $86 billion at the 25 percent tariff, said Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber of Commerce.

“Imposing these tariffs is going to weaken our economy,” he said in a conference call with reporters on Friday.

The United States imported $346 billion in Mexican merchandise in 2018, with motor vehicles ranking as the top import and accounting for $93 billion.

Stocks dropped Friday following the announcement, with shares of auto makers particularly hard hit, the Wall Street Journal reported.

Trade groups also warned of the potential consequences if Mexico were to retaliate with its own tariffs.

“Mexico is not only one of our top trading partners, it’s the number one export market for American consumer technology sector products—$41 billion worth of U.S. consumer tech sector goods in 2017, almost double that of our next highest export market,” said Gary Shapiro, the president and CEO of the Consumer Technology Association. “If Mexico reciprocates with tariffs of its own, our country’s employers and workers will end up paying twice over for the administration’s misguided trade policies.”

The U.S. agriculture industry has already seen fallout from the escalating trade war with China. Soybean exports to China dropped 74 percent in 2018 and stopped altogether this month, according to Bloomberg News. Farmers and political leaders in states that grow soybeans and other crops dependent on the export market have been agitating for months for a resolution.

Trump’s tariff plan could also derail the United States-Mexico-Canada Agreement (USMCA), which is meant to replace the North American Free Trade Agreement (NAFTA), warned Republican lawmakers.

“This is a misuse of presidential tariff authority and counter to congressional intent,” said Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican. “Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country.”

Grassley said border security and trade policy issues should be dealt with separately. He suggested Trump could use other means to penalize Mexico and collect money to fund border security, specifically by taxing remittances—the cash payments that Mexicans living in the United States send back to their home country.

Sen. Joni Ernst, chairwoman of the Senate Agriculture Subcommittee on Rural Development and Energy, said the failure to reach a broader trade agreement would harm the American agriculture industry.

“The USMCA would provide much-needed certainty to our agriculture community, at a time when they need it,” said Ernst, the junior Iowa Republican said. “If the president goes through with this, I’m afraid progress to get this trade agreement across the finish line will be stifled.”

Andrea Noble is a Staff Correspondent for Route Fifty.

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