Just days after dropping steel and aluminum tariffs on Mexico and Canada, President Donald Trump is threatening to reinstate new tariffs on all Mexican goods, an action that invites new retaliation and threatens the renegotiated North American trade pact just as chances for ratification appeared to be improving, say lawmakers and farm groups.
The White House announced Thursday evening that, in an effort to compel Mexico to clamp down on Central American migrants crossing the country to get to the U.S., it would hit all Mexican exports with a 5 percent tariff on June 10. The rate would go up to 10 percent on July 1, 15 percent on Aug. 1, 20 percent on Sept. 1 and 25 percent on Oct. 1.
"We'll impose a 5 percent tariff on every single good coming into the United States from Mexico," Mick Mulvaney, acting White House chief of staff told reporters. "That means across the border, in the air, by sea — every single good, 5 percent tariff, effective June 10th."
House Agriculture Chairman Collin Peterson told farmers in Minnesota on Thursday that he was increasingly optimistic that Congress would approve the USMCA this year. But on Friday he said he was concerned that imposing a new tariff on Mexico would "tank the agreement."
"I think it’s going to throw a wrench into things. I don’t know how you can say this isn’t going to affect it," Peterson said in an interview on the Adams on Agriculture radio show.
Pork producers suffered sharply from Mexican retaliation to the U.S. steel and aluminum tariffs. Those Mexican import taxes were just lifted, much to the relief of U.S. pork producers and exporters, but the National Pork Producers Council is already speaking out about the new threat and asking the Trump administration to allow trade to return to normal and concentrate on ratifying the U.S.-Mexico-Canada Agreement.
"We appeal to President Trump to reconsider plans to open a new trade dispute with Mexico,” said NPPC President David Herring. “American pork producers cannot afford retaliatory tariffs from its largest export market, tariffs which Mexico will surely implement. Over the last year, trade disputes with Mexico and China have cost hard-working U.S. pork producers and their families approximately $2.5 billion. Let's move forward with ratification of (USMCA), preserving zero-tariff pork trade in North America for the long term.”
White House Press Secretary Sarah Huckabee Sanders told reporters Friday that the tariffs should not get in the way of Congress ratifying USMCA.
“Frankly, we should be able to solve these other problems as well and hopefully we will,” she said.
But lawmakers like Senate Finance Committee Chairman Chuck Grassley are angered.
“Trade policy and border security are separate issues,” the Iowa Republican said. “This is a misuse of presidential tariff authority and counter to congressional intent. 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.”
Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, is another GOP lawmaker who is worried about the fate of USMCA.
“Mexico is a valued ally and the new tariffs are not yet in effect, so there is a window here for both countries to find common ground,” he said. “It is in both of our interests to do so, economically and for stronger security. Lawmakers in Congress and Mexico recognize that resolving this issue positively will be essential to passage of the new USMCA that will benefit workers, farmers, and businesses in both countries.”
The U.S. Wheat Associates is scheduled to send a delegation to Mexico next week to meet with customers and remind them how important their business relationship is to U.S. farmers. Trump’s new tariff threat may make that mission more difficult.
“We respectfully ask the Administration not to implement these new tariffs,” said USW Chairman Chris Kolstad. “The potential fallout for farmers would be like struggling to survive a flood then getting hit by a tornado.”
Philip Brasher contributed to this report.