Last week, Trump threatened to slap five-percent tariffs on all Mexican goods starting June 10th - and to increase the rate in the coming months to 25 percent - unless Mexico does more to stem the flow of undocumented migrants trying to reach the U.S. via Mexico.
Top administration officials said on Sunday that U.S. President Donald Trump's proposed tariffs on Mexican imports would not interfere with the finalization of a North American trade pact and were created to force Mexico's hand in immigration talks. He said, "Mexico should not allow millions of people to try and enter our country".
USA companies have begun to respond to President Donald Trump's proposed tariffs on Mexican imports with mixed comments on the effects they would have on them and their customers.
Just months after retaliatory tariffs deposed China as the leading customer for U.S. farm exports, President Trump threatened import duties of up to 25% on Mexico, the No. 1 food and ag trade partner of the U.S. Farm groups fear the trade war will cut deeper into the shrinking global market for U.S. crops and livestock. The 5% levy could go up from there, however, potentially rising to 10% by July 1 and perhaps as high as 25% on October 1 if meaningful measures aren't taken.
Pennsylvania's Republican senator from Lehigh County joined a chorus of criticism over President Donald Trump's threat to impose new tariffs on Mexican imports.
Mexico's Foreign Minister Marcelo Ebrard speaks during a news conference about the ongoing trade negotiations with the USA, at the Mexican Embassy in Washington, June 4, 2019.
"I know the Mexican delegation is here, apparently these talks are going well and I think our hope is that tariffs will be avoided and we'll not have to answer any hypotheticals such as you suggest", he said. Mr Ebrard will meet US Secretary of State Mike Pompeo tomorrow.
Mexican officials on Monday vowed to reject a US idea to take in all Central American asylum seekers if it was raised at talks this week with the Trump administration.
Ron Johnson of Wisconsin, who was among the senators who spoke up, said, "I think the administration has to be concerned about another vote of disapproval".
-Mexican talks this week but said the tariffs were still likely. Congress voted to disapprove of Trump's actions, but the president vetoed the resolution.
On Tuesday Kevin Clark, chief executive at auto supplier Aptiv PLC told investors at a conference in Boston that a 5% tariff would cost it around $17 million per month.
Mexico's economy, which is heavily reliant on exports to the United States, shrank in the first quarter, and would suffer a lot more if Mr Trump were to jack tariffs up all the way to 25 per cent. The problem is that Mexico is an "abuser" of the United States, taking but never giving.
Trump claimed "millions of people" are entering the USA through Mexico and criticized congressional Democrats for not passing new laws.
"This is much more harmful for the Mexican economy than the United States economy", he said. "We want to get the USMCA (United States-Mexico-Canada Agreement) passed".
Faced with this threat, major automakers are also planning to delay some vehicle shipments from Mexico, people briefed on the plans told Reuters on Tuesday.
So even a 5% tariff could have a "meaningful negative impact on profits until they can pass the higher costs along", Gibbs said.
Randy Mullett of Mullett Strategies told TT he believes the president is using the tariff threat as a negotiating tactic.
Given the escalating situation, Trump felt the need to apply more pressure on Mexico. This decision also threatens to upend 25 years of duty-free treatment for products that cross the U.S. -Mexico border, and violates longstanding American commitments under NAFTA and at the World Trade Organization.