The need for Mexico and Canada to raise the de minimis threshold so more products are exempt from fees and streamlined through screenings was cited by many groups File Photo

Trump puts tariffs on Mexico on hold for now

While U.S. manufacturers and business leaders push for USMCA ratification, the president still dangles tariff threat on Mexico imports.

President Donald Trump canceled plans to impose tariffs on Mexico imports, tweeting Friday night, June 7, that Mexico “agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border."

The news was welcomed by U.S. manufacturers and business leaders, who stressed the president and Congress to return their focus on ratifying the United States-Mexico-Canada Agreement (USMCA), the pending North American trade pact that would replace NAFTA.

The president had threatened to impose a 5% tariff on all goods imported from Mexico that would have begun on Monday, June 10, if Mexico did not make a commitment to stem migration into the U.S. across the Mexican border. That tariff tax would have increased by 5% each month, up to 25%, if Trump had not reversed course.

The tariff threat is on hold. At least for now, according to President Trump, who tweeted on Monday that part of the deal still needs to be ratified by Mexico’s Congress.

“We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the U.S. has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s legislative body,” Trump tweeted. “We do not anticipate a problem with the vote but, if for any reason the approval is not forthcoming, tariffs will be reinstated.”

The threatened tariffs were not popular with many Republican senators and the business community, including the Motor & Equipment Manufacturers Association (MEMA), which noted that tariffs on Mexico would raise the price for motor vehicle parts, cars, trucks, and commercial vehicles.

“Our members do well when we have regulatory and economic certainty,” said Ann Wilson, MEMA senior vice president of government affairs, said. “Investment requires that certainty. The whole trade policy this administration has developed has put that certainty at risk. We are the number one importer of goods for Mexico, so we are front and center in this debate.”

In 2018, two-way trade with Mexico in auto parts totaled $93 billion — or $255 million worth of goods a day, according to MEMA. Wilson also noted that the tariffs would threaten the pending USMCA.

“This agreement must be in place for our industry to continue to support manufacturing job growth in the U.S. The potential ripple effects of the proposed Mexican tariffs on U.S., North American and global trade efforts could be devastating,” MEMA stated in a release during the week leading up to the potential tariffs.

After Trump announced he would not impose the new tariffs, MEMA applauded the decision.

“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,” read a MEMA statement. “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.”

This weekend, the U.S. Chamber of Commerce praised the move to not impose the tariffs on Mexico.  

"We are very pleased that the Trump administration and the Mexican government reached an agreement to address the migratory crisis at the border and remove the threat of new tariffs,” Thomas J. Donohue, CEO of the U.S. Chamber, said in a statement. “This is good news for American businesses and consumers.”

Donohue added it is now “critical that Congress turn its attention to enactment of the USMCA trade agreement. USMCA will preserve and strengthen North American trade, boosting economic growth and job creation. The Chamber intends to put all of its resources behind securing the earliest possible passage of USMCA.”

While the president was touting his win in the immigration fight, critics said there were no new major commitments by Mexico to slow the migration of Central Americans to the U.S., including a report by the New York Times that this current immigration deal was agreed upon in March but not announced until this weekend.

The agreement would hasten the Migration Protection Protocols, which requires people seeking asylum in the U.S. to wait in Mexico until their cases are processed. Mexico would also send its National Guard to its southern border, where many of the migrants pass through on their way to the U.S. border.

TAGS: Economics News
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