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Trump's Mexico Tariff Plan Alarms Business Leaders

Sen. Grassley slams 'misuse of authority'
By Rob Quinn,  Newser Staff
Posted May 31, 2019 8:00 AM CDT

(Newser) – President Trump's plan to slap escalating tariffs on all imports from Mexico until the country stops the flow of migrants coming north is being criticized by business leaders—and a GOP senator who is usually a reliable Trump ally. Republican Sen. Charles Grassley, chair of the Senate Finance Committee, slammed the plan Thursday as "a misuse of presidential tariff authority and contrary to congressional intent," reports the Washington Post. Grassley warned that the tariffs, which Trump says will kick in on June 10, will "seriously jeopardize passage" of the new US-Mexico-Canada trade agreement. Trump says the tariffs will start at 5% and rise by 5 percentage points a month to 25% in October if Mexico doesn't stop migrants moving through the country from Central America. More:

  • "A national emergency." Trump administration officials described the tariff plan as a way to deal with a national security issue, the New York Times reports. "The situation is both a humanitarian and a border security crisis that has become a national emergency," Kevin McAleenan, the acting secretary of Homeland Security, said Thursday.
  • Trump's statement. The US "has been invaded by hundreds of thousands of people coming through Mexico and entering our country illegally," Trump said in a statement released by the White House. He said he was invoking national emergency powers to impose tariffs because 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."

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  • Response from Mexico. In an open letter, Mexican President Andres Manuel Lopez Obrador referred to America's history as a country of immigrants, the AP reports. "The Statue of Liberty is not an empty symbol," he wrote, telling Trump that "social problems are not solved with duties or coercive measures."
  • What the US wants Mexico to do. The White House didn't say exactly what Mexico would have to do to avoid tariffs, though McAleenan said it would involve boosting security at the Guatemalan border and cracking down on smuggling gangs. "We are going to judge success here by the number of people crossing the border and that number needs to come down substantially," said acting White House chief of staff Mick Mulvaney, per the Times.
  • Impact "wiped immediately." Trump's announcement was followed by drops in world markets and in the Mexican peso's value against the dollar. BBC economic correspondent Andrew Walker notes that this could mean Trump's plan to boost US competitiveness with the move has backfired already. "Half the potential impact for the first stage in the proposed tariffs hikes was wiped immediately by a decline in the value of the Mexican peso, which has the effect of making Mexico a little more competitive, at least until the tariffs come into effect," he says. Walker notes that Mexico will also be "a lot more wary" about approving the USMCA trade deal.
  • Higher prices. If Trump goes through with the plan—and some analysts predict that he won't—Americans could end up paying more for all kinds of goods in the months ahead as importers pass their costs on to consumers, the Hill reports. Mulvaney argued that Americans are already paying for the border crisis. "American taxpayers are paying for what’s going on at the border. This is already impacting the economy negatively."
  • A "terrible idea." Mexico is now America's biggest trading partner, and business leaders—especially those in border states like Arizona—strongly criticized the plan, the Arizona Republic reports. Glenn Hamer, president of the Arizona Chamber of Commerce, called the tariffs a "terrible idea" that could lead to a "self-induced economic slowdown." "Tariffs are taxes, and they’re taxes paid by hardworking American families," he said.
(Read more Mexico stories.)

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