According to an official statement and tweet from U.S. President Trump on May 30, the U.S. will impose a 5% tariff on all goods imported from Mexico beginning on June 10. The tariff hike is set to be issued in response to the sustained influx in migrants crossing the U.S. border through Mexico.

In the statement, President Trump asserts that, “Mexico’s passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States.” Last month, more than 144,000 migrants were detained after crossing the US-Mexico border illegally or after presenting themselves at registered ports of entry – the highest number in 13 years.

President Trump has threatened to increase the 5% tariff by an additional 5% on the first of each month until the tariffs reach 25%, unless Mexico successfully alleviates immigration into the U.S. with “effective actions … to be determined in [the White House’s] sole discretion and judgment.”

Mexico President Andrés Manuel López Obrador and officials are discussing the outlines of a deal that would dramatically increase Mexico’s immigration enforcement efforts and is presumed to satisfy the White House requirements. The accord, which has not yet been accepted by President Trump, would also give the U.S. far more latitude to deport Central Americans seeking asylum. In the meantime, President López Obrador has pledged to deploy up to 6,000 troops to Mexico’s border with Guatemala in an effort to reduce the number of Central Americans heading north towards the U.S. border.

According to the Washington Post, two Mexican officials report that the deal entails a sweeping overhaul of asylum rules in Mexico, including a requirement that Central American migrants must seek refuge in the first country they enter after leaving their homeland. The officials also made clear that negotiators plan to withdraw the offer if Trump makes good on his threat to impose tariffs, telling their U.S. counterparts that the economic damage would undermine Mexico’s ability to pay for tougher immigration enforcement.

GOP response and the effects at the border

U.S. Republican senators have encouraged President Trump to delay the onset of the 5% tariffs due to the likely impact on American citizens. CBS News reports that the people that are most vulnerable to the effects of these tariffs are the lower-income Americans who'll be forced to pay more for essentials, and workers in heartland states whose economies are tightly intertwined with Mexico.

Last year, Mexico was the third largest trading partner of the U.S. The proposed tariffs will likely result in higher prices for U.S. consumers and take a toll on both economies and the trade relationship between the two. These tariffs, along with the proposed tariffs on $300 billion worth of Chinese goods and the respective forthcoming retaliatory tariffs, could put pressure on the U.S. economy and lead to a drop in stocks.

 

-- UPDATE -- Since this post was published, the Trump administration announced that it will not impose additional tariffs on Mexican goods in exchange for Mexico agreeing to take “strong measures” to curb the influx of Central American migrants at the U.S. southern border. The specifics of the aforementioned deal are not presently publicly known.