May 31, 2019 - 9:45am

Quick Take: Your Primer on the New Tariffs on Mexico

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A truck waits to enter Mexico at the Calexico East Port of Entry in Calexico, CA.
A truck waits to enter Mexico at the Calexico East Port of Entry in Calexico, CA.

UPDATE (6/10/2019):

On Friday, June 7, the United States and Mexico reached an agreement to address the migratory crisis at the border and remove the threat of new tariffs. 

This is welcome news. 

"With the threat of tariffs now off the table, it is 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," said U.S. Chamber CEO Tom Donohue (read more)

Fill me in:

President Trump announced Thursday that the White House plans to impose a 5% tariff on all goods from Mexico starting June 10 in response to the influx of migrants across the southern border. The tax would gradually increase to as much as 25% until the flow of undocumented immigrants across the border stops.

Why does it matter?

Farmers, ranchers, workers, families, and businesses across the country are already reeling from the impact of recent tariff actions. New tariffs on goods from Mexico – which recently became America’s number one trading partner – will hurt American families and hobble the U.S. economy. In addition, the proposal introduces a major new hurdle to congressional approval of the U.S.-Mexico-Canada Agreement (USMCA) – all while doing nothing to help address the serious migrant crisis at the border.

Update (June 4, 2019): Opposition to the additional tariffs is growing quickly. Members of Congress and governors from both sides of the aisle, as well as local and state chamber officials across the country, have voiced strong opposition to the move, warning that the new tariffs will hurt their constituents, their states, their communities, and their businesses. Congressional Republicans reportedly are considering whether to vote to block the administration's planned new tariffs.

Number to know:

$17 billion. That’s the potential tax increase that would be passed along to American businesses and consumers by a 5% tariff on important goods from Mexico, which last year totalled $346.5 billion. Should the tariff reach the President’s threatened cap of 25%, that tax would eclipse $86 billion. But given how even a 5% tariff can disrupt trade flows, the economic impact could be much larger.

Another number to keep in mind? Trade with Mexico supports 5 million American jobs.

Our take:

“Imposing tariffs on goods from Mexico is exactly the wrong move. These tariffs will be paid by American families and businesses without doing a thing to solve the very real problems at the border. Instead, Congress and the president need to work together to address the serious problems at the border.” – Neil Bradley, U.S. Chamber Executive Vice President and Chief Policy Officer

View from a border state:

“The president’s announcement that he’ll impose a 5% tariff on goods imported from Mexico is a prescription for a self-induced economic slowdown… It completely contradicts the spirit of NAFTA, not to mention the USMCA that we’re attempting to ratify. Mexico is our friend and neighbor, a partner in trade and security. The president’s announcement is baffling and, if carried out, will be terribly damaging.” — Glenn Hamer, President and CEO, Arizona Chamber of Commerce

What’s next?

The White House must abandon this plan now. The administration should instead work closely with Mexico and the Northern Triangle nations to address the current migrant crisis at the border. Furthermore, Congress and the president must work together on commonsense legislative reforms to improve border security, fix our nation’s broken legal immigration system, and prevent these crises from occurring in the future.

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