The Mexico Tariff Crisis Is Over, Right? Uh, Maybe Not

Think tank shows how easily the White House could about-face and slap harsh levies on the neighbor to the south.

Whew. Good thing that threat to saddle Mexico with tariffs is gone. Or is it? A noted Washington think tank points out that President Donald Trump could reprise the levies.

“Given the emphasis President Trump places on both immigration and trade, it is not far-fetched to assume the threat of tariffs on Mexico could be revived,” the Center for Strategic & International Studies (CSIS) wrote in a research paper.

The president last week called off his threat to impose a 5% tariff—rising in increments each month by 5 percentage points, until 25% was reached—if Mexico did not stanch the torrent of Central American refugees seeking asylum in the US. The Mexicans have apparently pledged to step up their interdiction efforts to prevent the refugees from heading north.

After the pact was struck, Trump tweeted that he would go ahead with the trade sanctions if Mexico’s legislative branch did not OK it. Plus, US Treasury Secretary Steven Mnuchin said that the “Trump administration could move forward with the tariffs if it determines that Mexico is not meeting its commitments,” the paper said.

In the CSIS’s estimation, the Trump tariffs against Mexico would have affected businesses and consumers “negatively.” In 2019, it stated, Mexico supplanted China to become the US’s largest trading partner. The tariffs would’ve led to higher costs of goods for both Americans and Mexicans, the CSIS warned.

“Over the course of 2018, more than $1.67 billion in trade crossed the US-Mexico border daily,” the report said, “with the United States exporting $265 million worth of goods to Mexico and importing $346 billion. Top imports from Mexico include machinery, electric machinery, crude oil, and vehicles and parts.”

Although the goal of the tariffs was to force businesses to replace supply chains crossing the border to ones within the US, the think tank said, the greater likelihood would be that they would be replicated in other nations with lower labor costs than Americans have.

Related Stories:

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Wall Street Doesn’t Have Much Nice to Say on Mexico Tariffs
In Worsened Trade War, Goods Makers Will Hurt More, Says Goldman Sachs

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