President Trump Announces New Tariffs on Goods From Mexico
Another week, another round of trade news. On Thursday night, President Trump announced that his administration would be imposing new tariffs on Mexican imports that are set to take effect in just a couple of weeks. What’s more, unlike the more targetted tariffs on Chinese goods that apply to specific types of items, Axios reports that this latest tariff will be imposed on any import from Mexico.
In a tweet, the President explained that the tariffs were in response to Mexican immigration to the United States. He wrote, “On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied.” The White House later elaborated saying that the tariff will increase by five percentage points on the first of each subsequent month, topping at 25% come October 1st if necessary. A statement from the administration continued, “Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” adding, “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.”
While it’s no secret that President Trump has made halting illegal immigration a top priority (or talking point), the decision to take out his frustration via a tariff took some by surprise. After all it was merely two weeks ago the President agreed to lift steel and aluminum import tariffs for Mexico as well as Canada. This seemed to signal that the ratification of the United States-Mexico-Canada Agreement (USMCA) — which is intended to replace the current North American Free Trade Agreement (NAFTA) — was imminent.
With the U.S. now apparently fighting a trade war on two front, the Dow Jones Industrial Average took an early tumble as the markets opened this morning, falling more than 250 points within minutes of the bell. Notably the markets have already been slumping as of late due partially to the re-heightened trade tension with China. As a result CNN Business notes that the Dow in on track to post its sixth week of loses, which marks the longest losing streak in nearly eight years. Given the uncertainty surrounding these new tariffs, the trade war with China, and perhaps the future of the USMCA, next week promises to be another interesting week for the markets.