A historic free trade agreement that offers massive benefits for the economies of the United States, Mexico and Canada took a procedural step on the path to congressional passage on Thursday, but the agreement’s fate was thrown in doubt when President Trump later issued a tweet that could upend it all.
The president Thursday evening announced a plan to slap 5% tariffs on all Mexican goods coming to the U.S. until Mexico has been deemed to have sufficiently addresses the migrant crisis at the U.S.-Mexico border.
“On June 10th, the United States will impose a 5% tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our country, STOP. The tariff will gradually increase until the illegal immigration problem is remedied,” he tweeted, “at which time the tariffs will be removed.”
Those tariffs will increase month after month until they reach 25 percent if Mexico does not stop the flow of illegal immigrants. Mexico imports to the U.S. totaled an estimated $371.9 billion in 2018, according to the U.S. Trade Representative.
The news was devastating to industry leaders who have been calling on Congress to ratify a modernized free trade deal – the United States Mexico Canada Agreement (USMCA) – that would benefit all three countries for decades to come.
Ten months of trade wars with U.S. allies and China have taken their toll. This latest move is a threat to the nation’s economy, they said.
Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry expressed his distress over the “baffling” turn of events:
“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.”
Senate Finance Committee Chairman Chuck Grassley (R-Iowa), whose committee has oversight over the USMCA, also condemned President Trump’s new tariffs on Mexico in a statement released Thursday night.
Grassley called the move a misuse of presidential tariff authority that could ruin passage of the long sought after USMCA.
“Trade policy and border security are separate issues. This is a misuse of presidential tariff authority and counter to congressional intent,” Grassley said in the statement. “Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country.”
Former Arizona Senator Jeff Flake weighed in on the impact to Arizona via twitter, stating “Tariffs will weaken Mexico’s economy, and ours. There are better ways to address the immigration crisis.”
All three countries were in motion to ratify
Trump’s announcement came after all three leaders of the powerful trade bloc had just made the first moves required to get approval from their top lawmaking bodies to ratify the agreement. The USMCA would replace the 25-year-old North American Free Trade Agreement (NAFTA).
Most importantly, it would continue zero-tariff, open trade among the powerful triad.
On Thursday, Trump announced he was sending a notice, a “Statement of Administrative Action,” to Congress that starts the clock ticking on a 30-day window before he can submit the full implementing legislation to Capitol Hill.
In Canada, Prime Minister Justin Trudeau had made the first move, introducing the bill in the House of Commons the day before.
“The new NAFTA will secure access to a trading zone that accounts for more than a quarter of the global economy,” Trudeau said in introducing the bill. “It is now time for the members of this House to ratify it.”