President Donald Trump announced Thursday that the United States will impose new tariffs “on all goods imported from Mexico” unless the country does more to stop migrants from reaching the U.S. border.
A 5% tariff is set to go into effect on June 10 if the country does not step up immigration enforcement measures. The tariffs would gradually increase — an additional 5% on the first day of each month for four months — to a maximum of 25% by October, unless “the illegal immigration problem is remedied.”
Mexican President Andrés Manuel López Obrador responded to the threats in a two-page letter to Trump Thursday evening, where he addressed him as a friend and warned that these kinds of punitive measures are not the answer.
“With all due respect, although you have the right to express it, ‘America First’ is a fallacy because until the end of times, even beyond national borders, justice and universal fraternity will prevail,” López Obrador wrote.
“Social problems don’t get resolved with duties or coercive measures,” he added. “I don’t believe … in ‘an eye for an eye.’”
In order to determine whether or not the imposition of this sort of punitive tariff on one of America’s most important trading partners would be effective or not, there are four major questions that need to be addressed first.
Isn’t Mexico already helping the U.S. on immigration?
The demographics of U.S immigration have been gradually shifting over the last five years. No longer are the majority of immigrants arriving at the southern border single men from Mexico looking for work. Instead, Central American families fleeing violence are making the dangerous journey through Mexico to apply for the asylum in the United States.
President López Obrador initially claimed he would not do the “dirty work” of immigration enforcement in Mexico, but after Trump threatened to seal off the U.S.-Mexico border completely, the country has in recent months played a key role in breaking down Central American migrant caravans.
Acting Homeland Security Secretary Kevin McAleenan has said that Trump is asking the Mexican government to enforce its own southern border and put an end to the organizations that help transport migrants across Mexico. Both issues have been already addressed by Mexico in one way or another.
In April, as many as 500 Central American migrants were picked up by Mexican police and immigration officials during a raid in the southern Mexico city of Pijijiapan. Humanitarian visas awarded to Central Americans, which allow them to live and work in Mexico, have all but halted completely. When caravans have formed, Mexican authorities have tipped them off to administration officials. Police have routinely sealed off towns close to Mexico’s southern border and the government has even ordered bus operators to stop transporting migrants across the country.
McAleenan’s third ask from the Mexican government involves cooperation on asylum. The White House has attempted to halt Central American migration in variety of ways, most notably with Migrant Protection Protocols, also known colloquially as “Remain in Mexico.” Under this policy, Central American asylum seekers will, once they reach the U.S.-Mexico border apply for asylum before being sent to Mexico where they will wait until their day in court. This policy of course requires cooperation from the Mexican government, which had to provide the facilities to house hundreds of immigrants and work with the Trump administration on ensuring that migrants are notified when it is their time to return to the United States. About 3,400 people have been returned to Ciudad Juarez under the Remain in Mexico policy since March, when the program first started there. The total number of migrants returned to Mexico is expected to be around 6,000.
Given this close and ongoing cooperation between the two nations, it’s unclear what, if anything, punitive tariffs would be punishing.
How will this change in migration from Central America be measured?
Acting White House Chief of Staff Mick Mulvaney said Thursday the White House will judge the policy’s success if there is a “significant and substantial” decrease in the number of people crossing the border. But it’s difficult to precisely calculate this number.
Moreover, the changing seasons will also inhibit the efforts of U.S. officials attempting to accurately measure the impacts of the tariffs on Central American migration in this fashion. The number of border apprehensions declines in the summer months when it is far too hot and dangerous for anyone to traverse thousands of miles. Since 2000, apprehensions routinely peak in March and level off in June and July.
Last summer, when the Trump administration implemented its draconian family separation policy at the southern border, it manipulated this historic drop in border crossings to claim that the family separation policy was effective in its goal of deterring migration to the United States. One could foresee a situation wherein Trump interprets the routine drop in border crossings as a win for his administration’s policy, instead of accurately measuring its impact.
What about the impacts to the economy?
Mexico is one of the biggest trading partners of the United States, with U.S. imports of goods from Mexico totaling about $346.5 billion in 2018, according to the Office of the US Trade Representative. The majority of trade includes cars, trucks, and other automobile parts. American factories often depend on Mexico for these goods and would as a result actually hurt the made-in-America car industry that Trump so frequently champions. Mexico, meanwhile, sends nearly 80% of its exports to the United States. A 5% tariff on all its goods would have a devastating impact on its economy.
Details of the plan are fairly sparse at the moment, but the mere announcement has already had a tangible impact on the global markets. The Dow is expected to fall 230 points — roughly 0.9% — when markets open, while the Nasdaq could drop 1.1%, according to CNN. Trump’s series of Thursday night tweets sent the Mexican peso plummeting down about 2%.
Should tariffs reach the full 25% that Trump has threatened, American exporters of goods to Mexico will likely end up eating the cost of this new policy.
Mulvaney has stated that he hopes it will never reach that point.
“We sincerely hope it does not come to that,” he said Thursday. “We actually have some level of confidence that the Mexican government will be able to help us.”
Will economic threats solve a humanitarian problem?
In a statement released from the White House Thursday night, Trump expressed frustration over the increase in Central American migrants arriving at the U.S.-Mexico border. He falsely claimed the presence of “illegal aliens” has had “profound consequences on every aspect of our national life,” from overcrowding schools and hospitals to “draining our welfare system and causing untold amounts of crime.”
But even if that were true, is implementing tariffs on one of the nation’s most important trade allies the answer?
If anything, the tariffs would further harm the administration’s efforts to move forward with USMCA, a trade deal negotiated between the United States, Canada, and Mexico last year. On Wednesday, Vice President Mike Pence touted touting the strength of the deal, seen as the successor to NAFTA, in a state visit to Canada.
López Obrador said these threats do not “stop the process that has already started to ratify the deal,” but it’s unsure exactly how that would work, considering Trump’s tariffs would supersede any free-trade ratification signed by Mexico.