May 30, 2019

Trump announces new tariffs against Mexico

President Trump announced Thursday evening on Twitter new tariffs on all goods from Mexico until immigration into the U.S. is "remedied."

Why it matters: This is a sharp escalation of Trump's trade and immigration battles and comes as the administration was moving ahead to ratify new trade agreements with Mexico and Canada. The decision is sure to face opposition from some Congressional Republicans and could face legal challenges.

Details: If the crisis at the border isn't resolved, tariffs on Mexican goods will be raised by 5 percentage points on the first of each month, as high as 25% on October 1.

  • "Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory," according to a White House statement.
  • "Workers who come to our country through the legal admissions process, including those working on farms, ranches, and in other businesses, will be allowed easy passage," per the statement.

The big picture: May is on pace to have the highest number of border crossings in a month in more than 12 years, Department of Homeland Security Acting Secretary Kevin McAleenan told reporters on a call. Immigration agencies are overwhelmed.

  • More than 75,000 families have crossed this month and 4 children have died.
  • A record 80,000+ migrants are currently in immigration custody, including more than 50,000 in ICE custody.
  • A record 2,350+ unaccompanied children are currently being held in custody at the border.
  • 400 children arrived within the past 24 hours.

Between the lines: McAleenan said that Mexico needs to step up its security efforts at its southern border with Guatemala, crack down on smugglers who have been using bus lines to move migrants to the U.S. border, and "align on asylum. We need to be able to protect people in the first safe country they arrive in."

What they're saying: Jesus Seade, the trade negotiator for Mexican President Andrés Manuel López Obrader, said late Thursday that if the tariffs are implemented, “we should respond in a forceful way.” For now, he stressed the importance of waiting to see if the tariffs are “really on the table,”reports AP.

Our thought bubble via Axios' Felix Salmon: Strategically, it makes zero sense for the U.S. to enter a two-front trade war, engaging Mexico even as the confrontation with China is reaching a boiling point. China and Mexico are 2 of America’s 3 largest trading partners. To start trade wars with both of them is a declaration of isolationism not seen since 1945.

The fallout: The Mexican peso slumped more than 1.5% to 19.5 pesos per dollar while US stocks pointed to a lower open.

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