Trump's tariff on Mexican goods 'baffling,' 'reckless,' say critics from right & left
Az Chamber of Commerce: Border tax 'a prescription for self-induced economic slowdown'
President Donald Trump has once again threatened to punish Mexico with a tariff, this time arguing that country is not doing enough to stem the influx of Central American migrants coming to the southwestern border, but critics — including business conservatives — called the move everything from "baffling" to "unhinged."
Trump's tariff could spike to 25 percent on all goods imported from Mexico.
The head of the Arizona Chamber of Commerce said the tariff would be "a prescription for a self-induced economic slowdown," while U.S. Rep. Raul Grijalva, a Democrat, blasted Trump's "nonsensical trade policy" that treats Arizonans as "disposable pawns." Even U.S. Sen. Martha McSally, a Republican, panned the tariffs as posing "harm to our economy."
On Thursday, the president said that beginning on June 10, 2019, the United States will impose a five-percent tariff on all goods imported from Mexico, and if the "illegal migration crisis" is not alleviated "through effective actions taken by Mexico," the U.S. will ratchet up the tariff to 10 percent on July 1, 2019, raising the tax on U.S. goods another five percent for each month until October 1, 2019 when the tariff will "permanently remain" at the 25 percent level "until Mexico substantially stops the illegal inflow of aliens coming through its territory."
Mexico remains the third-largest trading partner with the United States, and Arizona's largest trading partner.
The United States imported more than $346.5 billion Mexican goods including cars, produce, and consumer goods last year, according to the U.S. Trade Representative, and around $9 billion in goods crossed into Arizona last year.
Arizona lawmakers, business officials and experts Friday blasted Trump's threat to impose a tariff, calling his plan everything from “terribly damaging” to “unhinged.”
Trump's plan comes as an influx of Central American migrants, almost two-thirds of whom are families traveling with children, or children traveling without parents or guardians, have crossed the U.S.-Mexico border to seek asylum from violence and poverty primarily from El Salvador, Honduras and Guatemala.
The increasing numbers of people have strained the resources of Border Patrol as especially large groups of people have come to the United States legally seeking asylum under both U.S. and international law.
In the last month, nearly 99,000 people were apprehended by U.S. Border Patrol agents, and another 10,000 were declared "inadmissible" by Customs officers at U.S. border crossings.
This was the largest number of people in a single month since April 2007, though it comes at a time when there are another 4,514 agents on staff.
Trump announced the tariffs Thursday – one day after Border Patrol agents apprehended a group of 1,036 immigrants crossing the border near El Paso – to pressure Mexico to “dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States.”
But critics said the move would do little to slow the influx of immigrants while doing a lot to harm U.S. businesses and consumers.
“Tariffs are not the way to handle the problems with immigration that we are seeing at the border,” said George Hammond, director of the Economic and Business Research Center at the University of Arizona’s Eller College of Management.
Arizona could be especially hard hit: Hammond’s center recently reported that the state exported almost $7.65 billion in goods to Mexico in 2018 and imported more than $9 billion from that country.
“Let’s just do simple math,” said Arizona Chamber of Commerce President Glenn Hamer. “A 5 percent tariff, that’s a tax of $450 million – and the president has threatened to ratchet this up to 25 percent. That’s billions of dollars. So, consumers are going to feel this.”
“Everyone is going to feel the pain, because tariffs are a polite way to say taxes,” said Hamer. He earlier called the threat of tariffs “a prescription for a self-induced economic slowdown” that “will only inflict harm on the U.S. consumer.”
'Dangerous overcrowding' in El Paso center
On Thursday, the Inspector General's office at Homeland Security announced after unannounced spot inspections in the El Paso Sector, the government watchdog found "dangerous overcrowding" at the El Paso Del Norte Processing Center, and that a station designed to hold around 125 people was instead holding 750 to 900 people on site, and that detainees were "standing on toilets to gain breathing space."
"Although CBP headquarters management has been aware of the situation at [the processing center] for months and detailed staff to assist with custody management, DHS has not identified a process to alleviate issues with overcrowding," the OIG said.
Nonetheless, after promising to stop illegal immigration, the White House has issued a salvo of orders or potential orders this year, including an attempt to pull nearly $8.1 billion from the Defense Department to build border barriers even after Congress denied that request during a lengthy shutdown of the federal government, a plan to build walls in nature reserves in Arizona and Texas, as well as changes to asylum law. Many of these plans have been thwarted by lawsuits.
Trump tariffs could hit 25% on Mexican imports
On Thursday, the president announced the plan, saying that the the United States has for decades "suffered the severe and dangerous consequences of illegal immigration."
"Sadly, Mexico has allowed this situation to go on for many years, growing only worse with the passage of time. From a safety, national security, military, economic, and humanitarian standpoint, we cannot allow this grave disaster to continue," Trump said.
Trump claimed his plan would actually benefit the economy by forcing companies that want to avoid the tariffs to move operations back to the U.S., bringing a “massive return of jobs back to American cities and towns.”
Trump said he has the authority under the International Emergency Economic Powers Act to impose tariffs starting at 5 percent on June 10 and rising 5 percent on the first of every month until they reach 25 percent. He said the tariffs would stay in place until the “immigration crisis is alleviated,” a benchmark to be “determined in our sole discretion and judgment.”
Az Chamber of Commerce: 'Baffling'
In a sharp critique, Glenn Hamer, the head of the Arizona Chamber of Commerce and Industry, called the announcement "baffling."
"The president’s announcement that he’ll impose a 5 percent tariff on goods imported from Mexico is a prescription for a self-induced economic slowdown," he said. "This will only inflict harm on the U.S. consumer."
"I’ve said it before, and I’ll say it again: Tariffs are taxes; and they’re taxes paid by hardworking American families," he said.
Hamer also criticized the plan as a "terrible idea," because it comes just as the White House is trying to get a replacement for the much-derided North American Free Trade Agreement past Congress. "It completely contradicts the spirit of NAFTA, not to mention the USMCA that we’re attempting to ratify," Hamer said. "Mexico is our friend and neighbor, a partner in trade and security. The president’s announcement is baffling and, if carried out, will be terribly damaging."
One of Trump's Republican allies in the U.S. Senate opposed imposing tariffs.
"Mexico is Arizona's number-one trading partner, accounting for over $16 billion in 2018 alone," said U.S. Sen. Martha McSally. "While I support the president's intention of stopping illegal immigration, I do not support these types of tariffs, which will harm our economy and be passed onto Arizona small businesses and families."
U.S. Rep. Raúl Grijalva, a Tucson Democrat, also criticized the president's plans.
"This reckless decision to slap tariffs on hundreds of billions of dollars in Mexican imports to the United States imperils the jobs and livelihoods of millions of Arizona workers and their families," he said. "Trump’s willingness to completely upend the economy removes any pretense that he cares about establishing good trade policies with our regional partners and is merely another attempt to exacerbate the crisis at the border and exploit it for his political gain."
"Make no mistake, these tariffs will do little to solve the humanitarian crisis at our border. Instead, it will only harm American consumers, businesses, and workers who will ultimately pay the price," Grijalva said. "The people of Arizona, asylum seekers, the economy, and our values deserve better than to be disposable pawns in Trump’s depraved game and nonsensical trade policy."
U.S. Rep. Ann Kirkpatrick, Tucson's other Democrat in Congress, also panned the tariff move.
“I thought you were a businessman @realDonaldTrump? This is a horrible policy and will have devastating impacts on our local economy,” Kirkpatrick said in a tweet. “Our border is an asset … (to) the entire state of Arizona.”
U.S. Rep. Tom O’Halleran, D-Sedona, said that Congress must address what he called “our broken immigration system,” but that imposing tariffs will not solve the problem and could derail ongoing trade negotiations.
“Arizona businesses and consumers rely on trade with Mexico every single day,” O’Halleran said in a prepared statement. “This decision to raise tariffs is going to hurt our economy and raise the prices of goods for working families.”
Even state Republicans were reluctant to endorse the plan, with most focusing instead on the need to fix the immigration problem.
Gov. Doug Ducey tweeted that he is “opposed to tariffs and deeply value Arizona’s relationship with Mexico,” but added that he prioritizes “national security and a solution to our humanitarian crisis at the border above commerce.”
U.S. Rep. Paul Gosar, R-Prescott, asked in a tweet, “How many more illegal aliens will come into this country before House Democrats acknowledge the crisis?”
Arizona House Democrats released their own statement.
"The economies of Arizona and Mexico, particularly our border state of Sonora, are completely intertwined. Trade with Mexico supports more than 100,000 jobs here, many of those in Yuma and the communities I serve," said Charlene Fernandez, a Democratic leader in the state Legislature. Fernandez also criticized Ducey for his support of Trump's move.
"It appears Trump just wants to change the subject from his potential impeachment to a manufactured humanitarian crisis at the border. For Gov. Ducey to side with an increasingly reckless president rather than defend the economic interests of his own state and hardworking Arizonans is extremely disappointing," she said.
The American Immigration Lawyers Association said that the plan will hurt American consumers and "won't stop asylum seekers."
"With these tariffs, the administration is seeking to blame others for a situation rather than taking responsibility for its own role in creating this crisis," said Anastasia Tonello, the group's president. "Punishing foreign country partners we need to work with, and harming the U.S. economy in the process, isn't the solution."
Benjamin Johnson, the group's executive director noted that the president spoke about the "cartels and coyotes" that are ruthless and merciless, "and yet his focus is on punishing those fleeing these ruthless cartels?"
"The administration's strategy has only ramped up the turmoil and suffering at the border," Johnson said. "Our nation needs solutions that restore order to the border region and improve the processing of migrants without sacrificing fundamental humanitarian values and damaging our economy."
AILA recommended that rather than implementing a tariff, the U.S. send more trained asylum officers to the border, allow asylum officers to conduct "full asylum adjudications" at the border, allow immigration courts to manage their own caseloads, and ultimately move the immigration court system out from under the Justice Department and into the judicial branch, use "alternatives-to-detention" programs, set up a process for people to seek asylum at home rather than "traveling thousands of miles on a dangerous journey," and "invest resources" to improve conditions in Central America.
Mexico's AMLO: 'Problems not resolved with taxes, coercive tactics'
In a response Thursday to Trump, Mexican President Andrés López Obrador wrote in Spanish that Mexico is working to stop Central American migrants from crossing his country on the way to the United States, adding that “social problems are not resolved with taxes or coercive tactics.”
The Mexican leader said his government is "complying with our responsibility to prevent, to the extent possible and without violating human rights, passage through our country."
"It’s worth reminding you that, before long, Mexicans will no longer need to go to the United States, and that migration will be optional, not forced. That’s because we are fighting corruption, Mexico’s main problem, like never before!"
"President Trump: You can’t solve social problems with taxes or coercive tactics," he wrote. "With all due respect, while you have the sovereign right to say it, the slogan 'America First' is a fallacy, because until the end of times, and above national borders, universal justice and brotherhood will prevail."
He stopped short of threatening retaliatory tariffs on U.S. goods shipped to Mexico, calling for continued dialogue between the countries – adding that he is “not a coward or timid” but saying leaders are “obligated to find peaceful solutions to controversies.”
Trade affected even by just Trump's threat
The markets were already reacting Friday to Trump’s announcement. The Dow Jones Industrial Average was down over 1.4 percent, the S&P 500 and the Nasdaq composite index fell 1.3 percent and 1.5 percent, respectively, a month-ending slide that led to the worst May since 2010, according to Marketwatch.
Dennis Hoffman, director of the L. William Seidman Research Institute at Arizona State University’s W. P. Carey School of Business, said the tariff threat also affected currency exchange rates.
“The Mexican peso deteriorated about 2.5 percent percent today,” Hoffman said Friday. “That means on exports, it’ll cost 2.5 percent more before Mexico even retaliates with any reciprocal tariffs, which they are likely to do.”
Hoffman said tariffs “unequivocally are paid by the exporters and the importers of these products and they get passed on downstream to the consumer.”
Many said that mixing immigration issues with international trade is a bad idea – and may not even be possible.
Simon Lester, a trade expert at the libertarian Cato Institute, said Trump’s porposed tariffs clearly violate the current North American Free Trade Agreement. Even if Mexico does respond to Trump’s demands to crack down on migrants, he said it might not have to the resources to do so.
“It’s just mixing bad trade policy with bad immigration policy,” Lester said.
Hamer said it’s just a “terrible idea.”
“It will not help our security situation,” Hamer said. “If anything it will imperil it because it could make it more difficult for the United States to work with Mexico.”
Mexico also dealing with migrant influx
Trump's confrontation on Mexico comes as a plan to mitigate migration from three countries in Central America appears to be collapsing. The Alliance Plan for Prosperity of the Northern Triangle of Central America, or PAPTN, was created in 2014 to promote development. However, according to data from the National Institute of Migration, around 19,000 Guatemalans deported from the U.S. and 12,345 Guatemalans deported from Mexico, came from 20 of the 50 regions "prioritized" by PAPTN, according to Prensa Libre.
And, Mexico has nearly doubled its own deportations, sending 25,069 Central Americans back to their home countries, including 3,289 minors, in January and February, reported PRI.
Cronkite News reporters Miranda Faulkner and Tim Royan contributed to this report.