By SEMA Washington, D.C., Staff
President Trump has threatened to impose tariffs on all goods imported from Mexico if it does not adequately deter asylum-seeking Central American migrants from crossing the U.S. southern border. The tariffs would begin at 5% on June 10 and increase 5% each following month until reaching 25% by October 1. The White House has not defined the levels of migration remedies necessary to preclude tariffs.
The tariff announcement was a surprise because Mexico and Canada had just reached agreement with the United States allowing the removal of 25% steel and 10% aluminum tariffs on May 20. That action had raised prospects that the U.S. Congress could pass legislation this summer approving the United States-Mexico-Canada Agreement (USMCA) to replace NAFTA, which seeks to establish a predictable application of tariffs.
The president’s authority to unilaterally impose tariffs that are seemingly unrelated to immigration may increase the chance that Congress will consider passing legislation to limit presidential authority. President Trump invoked a 1977 law, the International Emergency Economic Powers Act, which has been used to apply sanctions or freeze assets directly tied to national security threats but has never been used as a justification to impose tariffs. In reacting to the Mexican tariff threat, Sen. Chuck Grassley (R-IA), chairman of the Senate Finance Committee stated, “This is a misuse of presidential tariff authority and counter to congressional intent.” Pending legislation would require Congressional approval of tariffs or allow Congress to overturn tariffs that have been imposed.
President Trump’s tariff threat also undermines current negotiations with China, Europe and Japan since the goal is to provide certainty in how trade agreements are to be applied in practice. It remains unclear whether tariffs on Mexican goods will begin on June 10 or be delayed or abandoned pending discussions with Mexican government officials.
For more information, contact Stuart Gosswein at stuartg@sema.org.