President Trump threatened yesterday to impose tariffs on literally everything coming from Mexico unless the Mexican government reduces the number of migrants crossing into the United States. Starting June 10, the U.S. will impose a 5 percent tariff, rising to 10 percent on July 1, 15 percent on August 1, 20 percent on September 1, and 25 percent on October 1. Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops migrants – many not Mexican – from coming up through its territory to cross the border into the U.S.
This statement came just days after Canada, Mexico, and the U.S. finally resolved to eliminate the tariffs on steel and aluminum coming into the United States, and the retaliatory tariffs on U.S. products purchased in Canada and Mexico. That deal was supposed to launch the process for each country to pass NAFTA 2.0, which was agreed to in September 2018. Now that deal is up in the air.
Imposing tariffs on all products imported from Mexico would create significant economic harm. According to the United States Trade Representative, the U.S. purchased a total of $346.5 billion of goods from Mexico in 2018, predominately consisting of vehicles and other machinery. Mexico is our third largest trading partner (behind China and Canada) and largest supplier of agricultural products, consisting of fresh vegetables ($5.9 billion), other fresh fruit ($5.8 billion), wine and beer ($3.6 billion), snack foods ($2.2 billion), and processed fruit & vegetables ($1.7 billion).
Once again for the people in the back, and in plain English: Mexico will not pay these tariffs, Americans importing goods from Mexico will pay the price. An increased tariff on everything imported from Mexico means that Americans – consumers and businesses alike – will pay for more on everything from cars to food. So much winning.
Re-imposing tariffs on Mexico would be especially hard on the agricultural sector, already battered by loss of markets due to retaliatory tariffs from China and other nations targeted in President Trump’s trade war. The Trump Administration announced last week it will deploy $20 billion in income subsidies to farming and ranching businesses. This is on top of $12 billion in political hush money the administration deployed prior to the 2018 election. All of which is not just a little ironic given that some of the president’s most fervent supporters come from farm country.
But it’s not just farmers. Americans – starting with taxpayers, on whose dime all the dollars move – have felt the pain regarding past tariffs and will in the future. Because throughout the tariff wars with Mexico, Canada, China, and many other countries, it has become increasingly clear that tariffs are a tool of first choice for the Trump Administration rather than a last resort – regardless of the negative effects on the economy. We’re all in the president’s twilight zone of tariffs, and with no end in sight.