Jun 07, 2019 - 3:00pm

Tariffs on Mexico Would Hit Small Businesses Hard

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Trucks enter the U.S. from Mexico at the Calexico East Port of Entry in Calexico, CA.
Trucks enter the U.S. from Mexico at the Calexico East Port of Entry in Calexico, CA.

Last week, President Trump threatened to impose tariffs on imports from Mexico beginning on Monday, June 10, in response to the border crisis. Initially a 5% tax, the tariff is scheduled to ratchet higher each month and could rise as high as 25% by October 1 if the flow of migrants into the U.S. doesn’t slow.

The U.S. Chamber agrees with the President that we have a crisis at our southern border. It is a national emergency.

The question is how we respond to that emergency. The U.S. Chamber believes we need to do a number of things including securing our southern border, helping Mexico secure theirs, and addressing the violence and despair that is driving people out of the northern triangle countries.

This week we announced an initiative with Mexico’s chief business group to help work on these very issues.

However, raising taxes on Americans and harming U.S. manufacturers and farmers will do nothing to address the crisis at the border.

If a deal can’t be reached, they will be particularly harmful to small businesses, according to a U.S. Chamber analysis.

Forty percent of the 15,000 U.S. companies that import goods from Mexico have less than 50 employees.

A 5% tariff would cost them more than $800 million. If the tariff is raised to 25% it will cost them over $4 billion.

“It’s hard enough to survive as a small business owner without the added uncertainty and higher costs that are a direct result of placing tariffs on Mexican imports,” said Christel Slaughter, Ph.D., CEO of SSA Consultants in Baton Rouge, LA, and Chair of the U.S. Chamber Small Business Council. “Tariffs amount to nothing more than a tax on small business owners like me – a tax that I’ll pay on everything from office supplies and electronics to the food in my breakroom.”

Tariffs aren’t the answer to addressing the border crisis. President Trump should reconsider his approach.

The chart below breaks down the effects of the threatened tariffs by company size.

The impact of tariffs on Mexico on small and midsize businesses

Number of Employees
Number of Known Importers from Mexico
Share of Total Number of Known Importers
Cost at 5% Tariff*
Cost at 25% Tariff*

1-49

6,180

40%

$836 million

$4.2 billion

50-249

2,187

14%

$790 million

$3.9 billion

250-499

754

5%

$451 million

$2.3 billion

500+

2,036

13%

$10.4 billion

$51.9 billion

Unknown

4,324

28%

$822 million

$4.1 billion

*Based on 2016 data for known importers from Mexico. Actual cost of tariffs for 2019 would be higher.

Source: Census Bureau and U.S. Chamber of Commerce calculations.

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