Mexican, U.S. Officials Start Talks on Tariffs

Date: June 3, 2019
A Mexican delegation, led by Foreign Minister Marcelo Ebrard, started meetings with U.S. officials on June 3 to attempt to defuse a crisis initiated by a tweet on May 30 by President Donald Trump saying that he will impose a five percent tariff on all goods from Mexico on June 10 if Mexico does not “stop” illegal immigration into the United States. The President plans for these tariffs to escalate by five percent on July 1, August 1, September 1 and October 1, for a total of 25 percent if Mexico fails to act to his satisfaction.

Sometime this week an Executive Order is expected from the White House implementing this plan.

“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,” Trump wrote. “The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed. Details from the White House to follow.”

MEMA President and CEO Bill Long responded unequivocally to this new trade risk, “Tariffs on Mexican goods coming into the United States will only serve as an additional tax on the American people by increasing the cost of goods and putting jobs and investment in the U.S. at risk. In short, this action will undermine U.S. economic stability.

“Mexico is a critical trading partner for the motor vehicle parts industry, which is the largest sector of manufacturing jobs in the U.S. In 2018, two-way trade with Mexico in auto parts totaled $165 billion -- or $452 million worth of goods a day. Widely applied tariffs on goods from Mexico will raise the price of motor vehicle parts, cars, trucks and commercial vehicles -- and consumer goods in general -- for American consumers.
 
“This action also puts the U.S. – Mexico – Canada Agreement (USMCA), an essential trade deal with Mexico and Canada, at serious risk,” Long said.

Trump is using the International Emergency Economic Powers Act to impose the tariffs. He blamed Democrats for not contributing to an “easy” solution to illegal immigration and thus allowing Mexico to “take advantage” of the nation.

“Hard to believe that with the Crisis on the Border, the Dems won’t do the quick and easy fix,” he tweeted. “Would solve the problem but they want Open Borders, which equals crime!

“Mexico has taken advantage of the United States for decades. Because of the Dems, our Immigration Laws are BAD. Mexico makes a FORTUNE from the U.S., have for decades, they can easily fix this problem. Time for them to finally do what must be done!”

Trump’s announcement was followed by a significant decline in US stocks. On May 31, the Dow Jones average slumped by 355 points or 1.4 percent. Today the U.S. markets are opening mixed after slight declines in Asia and mixed results in Europe so far today.

“Wall Street was already under heavy pressure in recent weeks due to fears about the escalating trade battle with China,” wrote CNN. After the U.S. imposed Section 301 tariffs on China, the Chinese government not only promised to raise tariffs on U.S. imports, but threatened On May 31 to release a hit-list on “unreliable” foreign firms and organizations that they say poses risk to Chinese companies.

“If the China-U.S. trade war continues to grow larger, it may cause the global economy to decline, and may cause a global financial crisis,” said Dai Xianglong, former governor of the People’s Bank of China.

Mexico responded in a more measured manner. Mexico President Andrés Manuel López Obrador announced on May 31 that he would send his foreign minister immediately to Washington, D.C. to discuss the issue.

White House Press Secretary Sarah Sanders met with the press on May 31 to discuss the tariff threats to Mexico and how it could affect the passing of the USMCA. She was asked why lawmakers on Capitol Hill should pass the legislation when Americans will be forced to pay more for Mexican goods.

“They should go through with it USMCA because it’s good for American workers and it’s good policy,” Sanders said. “It’s good for farmers, it’s good for manufacturers, it’s good for the unions, it’s good for everybody. It’s a great deal and it’s something we should move forward with. Frankly we should be able to solve these other problems as well and we’re hopeful that we will.”
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