President Trump said Thursday that he will impose escalating tariffs on all goods imported from Mexico until authorities in Mexico stop migrants from crossing its territory and entering the U.S. illegally, a move that would cause economic upheaval in California and beyond.
The surprise announcement immediately threw into doubt the fate of one of Trump’s top economic priorities: passage of the revised North American Free Trade Agreement.
Trump said his administration will impose a 5% tariff on Mexican imports on June 10, but that will be doubled to 10% on July 1 unless the migration crisis “is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment.”
The penalties will increase by 5 percentage points per month until October, he said, after which tariffs “will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.”
In a tweet, Trump said the tariffs will increase “until such time as illegal migrants coming through Mexico, and into our country, STOP.”
The threatened tariffs could severely disrupt the two-way trade in goods, worth $611 billion last year, between the neighboring nations. The plan drew sharp criticism from some of Trump’s closest allies in Congress.
“This is a misuse of presidential tariff authority and counter to congressional intent,” said Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee. “I support nearly every one of President Trump’s immigration policies, but this is not one of them. I urge the president to consider other options.”
The stock market immediately signaled concern about a new front in Trump’s disruptive trade wars, which have chiefly focused on China. The Dow Jones industrial average futures fell 200 points, or 0.8%, while Mexico’s peso tumbled 2% against the U.S. dollar.
White House officials told reporters in a conference call that the tariffs would apply to all Mexican imports and would not target specific products.
Acting White House Chief of Staff Mick Mulvaney would not define the administration’s demands for Mexican action in terms of percentage declines in arrivals at the U.S.-Mexico border, or suggest a specific number of migrants be removed from Mexico.
“We are going to judge success here by the number of people crossing the border and that number needs to start coming down immediately in a significant and substantial number,” Mulvaney said.
Mulvaney said a handful of Republican lawmakers, but no Democrats, were briefed on the president’s plan.
Mexican President Andres Manuel Lopez Obrador implored Trump to negotiate rather than make threats. He said Foreign Secretary Marcelo Ebrard would lead a delegation to Washington on Friday “to arrive at an agreement that benefits both nations.”
“Social problems are not resolved with taxes or coercive measures,” Lopez Obrador wrote in a two-page letter released in Mexico City late Thursday.
He called Trump’s “America first” slogan “a fallacy,” and criticized the U.S. for changing from a country where immigrants were once welcome to “a ghetto ... where the immigrant is stigmatized and mistreated.”
Partly in response to U.S. pressure, Lopez Obrador had recently launched a fresh crackdown on U.S.-bound migrants, mostly Central Americans, traversing Mexican territory.
If imposed, the tariffs could be devastating for California.
The state imported $44 billion in goods from Mexico in 2018, making it the third-largest importing state for goods from Mexico, according to the California Chamber of Commerce.
Mexico is also California’s number one export market, buying $30.7 billion in goods last year, 17% of all California exports.
Computers and electronic products remained the state’s largest exports, accounting for 25.8% of all California exports to Mexico.
Trump and his closest aides have grown increasingly frustrated in recent months as near-record numbers of Central American families and asylum seekers have arrived at the southern border, despite the administration’s aggressive deterrence and enforcement efforts.
On Thursday, Border Patrol agents in Texas apprehended 1,036 people after they illegally crossed the border in El Paso — the largest single group ever encountered, according to the agency.
Mexico has removed more Central American migrants than the United States in the last several years, however.
About 6,000 Central American asylum seekers, and thousands more from other countries, are waiting in Mexican border cities while their cases are processed in U.S. immigration courts, or are waiting to make their claim at ports of entry along the border.
Immigration advocates slammed Trump’s threat as self-defeating, and his demands as impossible for Mexico to meet.
“Beyond this being terrible policy, it’s ridiculous to think that Mexico could stop migration,” tweeted Stephanie Leutert, the director of Mexico Security Initiative at the University of Texas at Austin.
U.S. border officials have only a 70% success rate in stopping migrants who attempt to enter the country illegally, she said, and Mexican authorities are “less equipped and more corrupt.”
While Mexico has long been a corridor for migrants headed to the United States, the high proportion of women and children is a new phenomenon, since earlier groups mostly consisted of single men.
The Trump administration spent more than a year renegotiating NAFTA with Mexico and Canada, and earlier Thursday, the administration took a key procedural step aimed at having the revamped pact, dubbed U.S.-Mexico-Canada Agreement by Trump, ratified by Congress this summer.
Christopher Wilson, deputy director of the Mexico Institute at the nonpartisan Wilson Center in Washington, said the timing of Trump’s threats is peculiar given the push to pass the trade bill.
“It just seems that U.S. policy is running at cross-purposes here,” Wilson said. “It would squeeze Mexico but also the U.S. economy.”
Only two weeks ago, Trump lifted nearly yearlong tariffs on Canadian and Mexican steel and aluminum that he had imposed for leverage in negotiations and to bolster U.S. metal producers. The removal of those tariffs was crucial in getting Mexico and Canada to move ahead toward passage in their legislatures.
Only hours earlier, Mexico’s president said he was calling back the Mexican Senate, already in recess until September, for a special session this summer to consider passing the new trade accord. But now, all bets may be off.
“The timing is unbelievable,” said Daniel Ujczo, an international trade lawyer at law firm Dickinson Wright who has closely followed the North American trade politics. “This certainly stalls the Mexican process for ratification.”
In issuing the new tariffs, Trump invoked the International Emergency Economic Powers Act — an authority that has not been used in recent memory. Trump tapped a different law to slap tariffs on metals, using powers granted the president to act if he considers imports a threat to national security.
“This is an unprecedented action and an abuse of the International Economic Emergency Powers Act. I suspect it will be challenged in court,” said Douglas Irwin, a trade historian at Dartmouth College.
Since taking office, Trump has imposed an extraordinary amount of tariffs on numerous countries. Many were met with retaliatory tariffs that have hurt businesses and America’s international relations as well as cast a cloud over financial markets and investments.
This isn’t the first time that Trump has linked tariffs and trade with his demands that Mexico do more to stanch the inflow of illegal immigrants.
Shortly after he took office, he threatened then-Mexican President Enrique Peña Nieto that his administration would consider a 20% tax on sales by U.S. firms of imported goods from Mexico if Mexico did not pay for a wall across the southern border.
Mexico didn’t pay, and Trump didn’t impose the tax.
Stephen Cheung, president of Los Angeles’ World Trade Center, called Trump’s latest tariffs “quite devastating to California’s international trade community. Los Angeles is particularly dependent on international trade and this would have a major effect on the local economy.”
The Mexican tariffs would affect not just Southern California’s multibillion-dollar logistics sector, stretching from the ports of Los Angeles and Long Beach through the warehouses of the Inland Empire, but it would also hurt the state’s manufacturing base, Cheung said.
“Components for machinery and electronics move back and forth across the border,” he said. “These tariffs will raise the prices of goods for consumers.”
The tariffs would hit as tariffs on China goods have prompted many California companies to look at sourcing components in Mexico, Cheung said. Now that supply chain switch may not be feasible.
“It is regrettable that the administration is tying trade as a way to a political discussion,” he said. “This will affect California’s future growth.”
O’Toole and Lee reported from Washington and Roosevelt from Los Angeles. Times staff writers Noah Bierman in Washington, Kate Lithicum and Patrick J. McDonnell in Mexico City, and Dan Beucke in Los Angeles contributed to this report.