May 31, 2019
The U.S. will impose a 5% tariff on all Mexican imports from June 10, President Donald Trump said in a Thursday evening Twitter post.
Duties of up to 25% will be added in the coming months if Mexico does not take action to "reduce or eliminate the number of illegal aliens" crossing into the U.S., the White House said in a statement.
The U.S. will impose a 5% tariff on all Mexican imports from June 10 - and duties of up to 25% will be added in the coming months if Mexico does not take action to "reduce or eliminate the number of illegal aliens" crossing into the U.S., the White House said Thursday.
That comes despite U.S. Trade Representative Robert Lighthizer on Thursday sending a letter to congressional leaders to kick start the process of approving updates to the North American Free Trade Agreement.
U.S. President Donald Trump first announced the Mexico tariffs on Twitter.
Mexico was the second-largest importer of goods into the United States in 2018, according to the Office of the U.S. Trade Representative.
The United States imported $346.5 billion of goods from Mexico in 2018, an increase of 10.3% over the year prior, according to the USTR. The 2018 total accounted for 13.6% of overall U.S. imports that year.
Linked to 'illegal migration crisis'
"If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed. If the crisis persists, however, the Tariffs will be raised to 10 percent on July 1, 2019," the White House said.
"Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019," it added. "Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory."
How do tariffs work?
Mexico is the largest foreign supplier of agricultural products to the United States, totaling $26 billion last year, according to the USTR. Top categories among those imports included fresh vegetables, fresh fruit, wine and beer, and processed foods.
In a letter addressed to Trump, Mexican President Andrés Manuel López Obrador said he did not want confrontation, and that leaders have a responsibility to seek peaceful solutions to controversies.
"President Trump: Social problems cannot be resolved with taxes or coercive measures," the Mexican leader wrote.
He added: "I propose to deepen the dialogue, seek alternatives to the immigration problem and, please, remember that I do not lack courage, that I am not cowardly nor timid but that I act on principles: I believe in the policy that, among other things, was invented to avoid confrontation and war."
López Obrador requested that U.S. and Mexican officials begin meeting on Friday to discuss how to "reach an agreement for the benefit of both nations."
U.S. Senate Finance Committee Chairman Chuck Grassley slammed the move, calling it a "misuse of presidential tariff authority."
"Trade policy and border security are separate issues," Grassley said in a statement following the Trump's announcement. "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," he warned.
Trade agreement updates
According to a copy of a letter obtained by CNBC, Lighthizer on Thursday submitted to congressional leaders a draft of the so-called Statement of Administrative Action, which would allow the Trump administration to send the proposed United States-Mexico-Canada Agreement (USMCA) to Congress within 30 days.
The USMCA is a deal made with Mexico and Canada last year that replaces the 1994 North American Free Trade Agreement, which the president has criticized as a "disaster" that saps American jobs.
Trump has indicated he wants to quickly overhaul trade relations with Canada and Mexico, but any such move would require Congressional approval of the USMCA. The White House has said it wants to ratify the deal this summer.
Analysis Shows Tariffs Could Cost up to 45,800 U.S. Jobs
Trade groups representing several beverage alcohol suppliers, wholesalers, importers and retailers, submitted comments to the United States Trade Representative (USTR) urging the removal of spirits, wine and non-alcoholic beer from its draft list of European Union (EU) products being targeted for proposed retaliatory tariffs.
The preliminary list of targeted EU products, which was announced by the USTR April 8, includes brandy, liqueurs and cordials, wine and non-alcoholic beer, as well as many other EU products. The issuance of the proposed list is part of a long-standing dispute at the World Trade Organization (WTO) regarding civil aircraft subsidies and is unrelated to the beverage alcohol industry.
In the submission, the groups stated they "strongly oppose the inclusion of beverage alcohol products in the proposed retaliation list" and warned that the tariffs will have numerous unintended negative consequences, including on U.S. jobs, U.S. consumers and on U.S. companies that export to the EU, some of which already face retaliatory tariffs to that market.
The proposed retaliatory tariffs on certain beverage alcohol products imported from the EU would impact nearly $6.8 billion in imports and could lead to a loss of approximately 6,600 to 45,800 U.S. jobs, according to an industry analysis.
The groups pointed out that many U.S. companies--from farmers, to suppliers to retailers--are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain U.S. distilled spirits and wines resulting from other trade disputes, and that additional tariffs will only inflict further harm.
They cited, for example, that several small U.S. distillers and wineries report that their export orders have been cancelled after spending years of work and hundreds of thousands of dollars building up demand for their products in overseas markets. As a result, some U.S. distillers and wineries are holding off on expansion plans and new hires.
The EU responded to the U.S. draft list with its own preliminary list of U.S. products that it would target for retaliatory tariffs in a related WTO dispute, which included wine, rum, vodka, and brandy.
The groups stated, "We are gravely concerned that this escalation would compound the negative impact of the tariffs on a sector that is already feeling the damaging impact resulting from unrelated trade disputes."
The joint comment was submitted by the Distilled Spirits Council of the United States, American Craft Spirits Association, American Distilled Spirits Association, Kentucky Distillers' Association, Wine Institute, WineAmerica, Wine & Spirits Wholesalers of America, American Beverage Licensees and the National Association of Beverage Importers.
(click here to read the full text of the public comment)
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By ALEXI COHAN | email@example.com | Boston Herald
PUBLISHED: March 23, 2019 at 9:06 pm | UPDATED: March 24, 2019 at 6:36 am
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