Talk of the Town

Date: June 11, 2019

President Trump Reverses Mexico Tariff Threat

 

Washington Insider Editor’s Note: The Motor & Equipment Manufacturers Association applauds President Trump’s decision to not impose tariffs on all goods coming from Mexico into the United States. We are pleased that he heard the motor vehicle parts supplier industry, which represents the largest sector of manufacturing jobs in the U.S., and that he agreed that tariffs would hurt American businesses and consumers. MEMA and its member companies urge Congress and the administration to redouble its efforts to address immigration and the crisis at our border with Mexico.

Our industry depends on a vibrant and health North American supply chain, and Mexico is a critical trading partner. In 2018, two-way trade with Mexico in auto parts totaled $93 billion -- or $255 million worth of goods a day. It is critical that confidence and stability in this supply chain remain in place. For that reason, MEMA strongly urges the Trump administration to put the threat of these and other tariffs aside and return to working with Congress to ratify the United States-Mexico-Canada Agreement (USMCA).

President Donald Trump announced June 7 that he will shelve the tariffs on Mexican goods. U.S. officials were able to reach a deal with Mexico to tighten border security just three days before the first wave of tariffs would go into effect.

"I am pleased to inform you that The United States of America has reached a signed agreement with Mexico," the president tweeted. "The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended."

Mexico has taken significant steps in their negotiations with U.S. officials to counter the number of illegal immigrants crossing the border, according to an article from the Wall Street Journal.

“[Mexico] came to the table with a few things they wanted to do immediately to try to stem the flow of immigrants,” a White House official said on June 6.

Vice President Mike Pence, along with Secretary of State Mike Pompeo and acting Homeland Security Secretary Kevin McAleenan, hosted a meeting on June 5 with Mexican officials. U.S. officials said they made progress in discussions over border security but we’re then uncertain a deal could be made that could reverse the tariff threat.

“White House officials earlier Wednesday had downplayed the prospect that the meeting would yield a breakthrough,” wrote Politico, “arguing instead that it is starting point in a series of upcoming negotiations between the two countries aimed at stemming the flow of Central American migrants seeking to enter the United States.”

But according to CNN, the deal that was reached will hold Mexico responsible for using their National Guard to stop the flow of Central American immigrants from illegally crossing the border. Asylum seekers will be held in Mexico, where they will be offered health care, education and jobs while the U.S. works to speed up their asylum process.

Insisting that the tariffs would encourage Mexico to stop the flow of Central American immigrants entering the U.S., President Trump tweeted on May 30 that he will first hit Mexico with a five percent tariff on June 10, increasing the percentage by five points on the first of every month. If no deal is made that satisfies the president, he will cap the rate at 25 percent beginning Oct 1.

The president was at first skeptical that the U.S. and Mexico could reach a deal before the five percent tariffs are implemented.

“I think it’s more likely that the tariffs go on, and we’ll probably be talking during the time that the tariffs are on, and they’re going to be paid,” he said on June 4 in London.

But despite the impending restriction on Mexican goods, the president and other officials showed optimism towards Mexico’s ability to end illegal border crossings.

"The drugs that are coming in. The people that are coming in they are swamping the border. They are coming up by the millions. Mexico can stop it," the president said before the meeting began. "I think they will stop it. I think they want to do something. I think they want to make a deal and they sent their top people to try to do it."

White House trade adviser Peter Navarro shared similar beliefs in an interview on CNN.

“We believe that these tariffs may not have to go into effect precisely because we have the Mexicans' attention," he said.

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