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Published: Thursday, May 30, 2019 @ 9:52 PM
— Following through on his promise earlier in the day to do something 'very dramatic' to limit illegal immigration, President Donald Trump on Thursday night announced he would slap steadily increasing tariffs on all imported items from Mexico starting in June, in a bid to force Mexico to stem the tide of immigrants crossing the southern U.S. border.
"Mexico’s passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States," President Trump said in a statement sent to reporters.
Under Mr. Trump's plan, a five percent tariff would be levied 'on all goods imported from Mexico,' as the President threatened to keep increasing that tariff over the next four months to 25 percent by October - if Mexico does not take major action on immigration.
"Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory," the President said.
On June 10th, the United States will impose a 5% 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,..— Donald J. Trump (@realDonaldTrump) May 30, 2019
As with tariffs that President Trump has levied on imports from China, Canada, Mexico, and the European Union, the duties are paid by U.S. businesses importing the goods - and then often passed on to consumers, which is why many often equate tariffs with taxes.
"The President is unilaterally imposing the equivalent of a 17 billion dollar sales tax," said Sen. Brian Schatz (D-HI).
The tariffs have also provoked retaliation by other nations - including Mexico - which have been aimed mainly at U.S. farm exports.
"Make no mistake — the president’s tariffs are hurting our farmers and our ag economy," said Rep. Cheri Bustos (D-IL). "It’s past time to end these disastrous policies."
“Trump’s tariffs are holding us back from 4% GDP growth,” the conservative group Club For Growth said recently. “Tariffs are a tax and they're paid by middle-class consumers.”
The move also clearly angered one key GOP opponent of tariffs, Iowa Republican Charles Grassley.
“Trade policy and border security are separate issues,” Grassley said in a statement Thursday night. “This is a misuse of presidential tariff authority and counter to congressional intent.”
SENATE FINANCE CHAIR CHUCK GRASSLEY: "“Trade policy and border security are separate issues. This is a misuse of presidential tariff authority and counter to congressional intent."— Jake Sherman (@JakeSherman) May 31, 2019
Goods imports from Mexico totaled $346.5 billion in 2018 (https://t.co/ZTtTme4BLu)— Erica York (@ericadyork) May 30, 2019
A 5% tariff on that flow of goods amounts to a $17 billion tax increase.
Mexican Deputy Foreign Minister Seade: If President Trump's Threat To Impose Tariffs Is Carried Out It Would Be Disastrous— LiveSquawk (@LiveSquawk) May 30, 2019
-If Tariffs Are Imposed We Would Respond "Strongly"
US imported approx $15bn worth of crude oil from Mexico last year, or more than 700,000 b/d.— David Sheppard (@OilSheppard) May 31, 2019
Third biggest supplier after Canada + Saudi Arabia.
In a business where fortunes are made and lost on cents-per-barrel differences, 5% is ~$3/bbl. Refiners will be sweating #OOTT
For context, the president is now raising taxes by $87B annually from tariffs. (Assuming just enacted and 5% on Mexico.) Cutting the corporate tax rate from 35 percent to 21 percent in TCJA, costs $125B in 2019, per JCT. These are large tax hikes.— Nicole Kaeding (@NKaeding) May 31, 2019
The tariff threat also came at the same time that the President is trying to get Congress to agree to the new USMCA trade deal with Mexico and Canada - which would not allow exactly this type of trade threat.
"The White House’s actions on trade today are frankly bewildering," said Rep. Don Beyer (D-VA). "If Trump wants to prevent USMCA from being ratified this is a great way to do it."
But for many Republicans, the risk of a negative impact on the American consumer is one to take.
"The crisis happening at the border is real," said Rep. Billy Long (R-MO). "I fully support securing our nation's southern border."
"I don't like tariffs but in this case it is a national security issue and Mexico needs to change their behavior," said Sen. Lindsey Graham (R-SC).
According to the U.S. Trade Representative's office, Mexico is the third largest goods trading partner with the U.S., while the U.S. was the second largest export market for Mexico.