Trump Administration Announces New Tariffs On Mexico

May 31, 2019
Originally published on May 31, 2019 10:19 am
Copyright 2019 NPR. To see more, visit https://www.npr.org.

STEVE INSKEEP, HOST:

President Trump says he will impose pain if Mexico does not stop migration to his satisfaction. One open question is who will feel that pain. The president made a demand last night for Mexico to block migrants at the U.S. southern border, or the United States begins imposing tariffs, starting at 5% and climbing to 25 by this fall, on everything that Americans buy from Mexico. This tax increase on American companies and consumers would begin next month. Well, how's it look from Washington? And how's it look from Mexico?

Let's begin with NPR White House correspondent Tamara Keith. She is on this side of the border. Hi there, Tam.

TAMARA KEITH, BYLINE: Hi.

INSKEEP: So if there's a tariff on everything from Mexico, what kinds of products are we talking about here?

KEITH: Everything, absolutely everything from avocados to cars. Everything that comes into the U.S. from Mexico would have a tariff placed on it. And a lot of products go back and forth across the border. Cars, given this deeply intertwined system now, are built both - on both sides of the border - the same car.

INSKEEP: That's a good point. So is it legal for the president to impose tariffs on those products, on everything - in these intertwined economies, as you say - for this particular purpose?

KEITH: So what the president is doing is invoking the International Emergency Economic Powers Act. It has never been used in this way before, to impose tariffs. That's according to a recent Congressional Research Service report. In the past and currently, it's used to do things like freeze assets connected to Iran or international terrorism. That's a more common way that it's used.

But in this case, the White House is saying that this is a humanitarian and national security crisis. The president is deeply frustrated - and his administration - by high numbers of Central American migrants crossing the border, including families and unaccompanied children seeking asylum. And they say Congress isn't acting quickly enough. And so they are trying to put pressure on Mexico to fix it from their end.

INSKEEP: Can I just ask about Congress? There's already been some concern expressed by Republicans, powerful Republicans like Chuck Grassley of Iowa, for example, who put out a statement saying this is a bad idea. It's going to threaten your own trade agreement with Mexico, Mr. President. And we hope you don't go through with this threat. Grassley's statement refers to it as a threat, not something the president is actually doing. Is it just a threat?

KEITH: Well, until June 10, when the tariffs would begin to slowly go into effect, right. It is just a threat until it happens. And even Mick Mulvaney, the White House chief of staff, is saying, we hope we don't have to get to this. We think there are things that Mexico could do now to fix this, and it wouldn't have to happen.

And we should just say that there is a pattern with President Trump of creating a crisis or, you know, doing something that sets the whole world at unease and then coming back in and trying to fix it.

INSKEEP: Well, Tamara, stay with us for a moment, if you would, because I want to bring another voice into the conversation. Luis de la Calle is the former minister of trade issues at the Mexican Embassy in Washington, D.C. He helped negotiate NAFTA once upon a time. He's now in Mexico City and an independent economist. Good morning, sir.

LUIS DE LA CALLE: Good morning. How are you?

INSKEEP: OK. Thanks for joining us so early. How are people responding where you are?

DE LA CALLE: Well, I mean, we see this has very negative views. It's a counterproductive idea. In the end, it would not accomplish what President Trump wants. I mean, the U.S. and Mexico should collaborate on this very serious, difficult issue, which is migration from Central America.

But imposing duties on Mexico would only cause economic harm to Mexico, of course, but also to the U.S. I mean, markets are already reacting negatively to the measure and the expectation of falling. The Dow and Standard & Poor's, the market's up and up, but the Mexican peso's already down 3%. So...

INSKEEP: But you did just acknowledge there - let's just follow this through. Americans do pay the tariffs. Americans end up paying these tax increases. But you acknowledge there could be some economic harm to Mexico if Mexico ends up selling fewer goods to the United States.

And let's be frank. Let's be explicit. That's what the president wants. The president wants Mexico to feel pain, to be humiliated, and then to do what he wants. Why wouldn't Mexico then say, OK, we're humiliated. We're feeling pain. We will now do what you want?

DE LA CALLE: Well, because in order to really stop migration, we need economic development. I mean, if you remember 25 years ago, we had duties between Mexico and the U.S. There was a lot of (ph) migration flows between Mexico and the U.S. Now that Mexico is better off, migration flows are much less. If we impose duties on Mexico and Mexico's economies suffer, the pressure to have more migration will actually increase. And that's economically. And politically, coercing Mexico into doing something will make it politically impossible for Mexico's president to actually collaborate with the U.S.

So I don't see how this is smart or this is wise and this will be conducive to a more and better migration flows at the border rather than less of, which is what President Trump wants.

INSKEEP: Now, you are focused essentially on the economic incentives or security incentives for people to flee out of Central America through Mexico, toward the United States. You're essentially saying there is a reason that people are coming. The president's theory of the case is that Mexico is not trying very hard to stop people, that Mexico's passive cooperation, to use a phrase from the White House statement, is the problem. Is there any evidence that Mexico is not trying very hard to stop migration from going north?

DE LA CALLE: Well, I mean, I think Mexico has gone to great lengths to help on this. I mean, we have told the - our Central American migrant workers that they can stay in Mexico if they want, that we can give them visas. We have opened up refugee centers on the Mexican side of the border. We have also agreed to take Central Americans, be them in Mexico, while they have their pending cases in the U.S.

So this is an unprecedented collaboration. It's a very difficult situation. I mean, we have to work harder to make it easier for everybody. But, I mean, I think that this calls for more and not less collaboration with the U.S.

INSKEEP: Weren't things moving in a better direction with the United States and Mexico just recently because the U.S. and Mexico signed a new free trade agreement?

DE LA CALLE: Well, not only that, I mean, President Trump sent to the Congress yesterday the documentation for the approval process of the USMCA, which proposes to permanently eliminate duties between Mexico, the U.S. and Canada, with the purpose of being more competitive worldwide.

So - and at the same time, he's making this announcement that runs counter to that specific objective. So it's a little disconcerting that on the one hand, he wants to deepen the integration with Mexico. On the other hand, I mean, he appears to do the reverse.

INSKEEP: I ask here just for your instinct. We've said this appears to be, at this moment, a threat. The president hasn't actually done it. Do you assume the president will really do this?

DE LA CALLE: I think he will not do it in the end. I mean, we have in Mexico a populist leftist government now, pushing Mexico against a free trade, free markets. It's a real national security threat to the U.S., much more than Central Americans walking up to Mexico, and then through Mexico to the U.S.

INSKEEP: Wow. Luis de la Calle, thanks so much.

DE LA CALLE: Thank you.

INSKEEP: Luis de la Calle is a former Mexican government official, now an independent economist. Transcript provided by NPR, Copyright NPR.