Trump’s Mexico tariff plan raises concerns in Texas - Brownsville Herald: News

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Trump’s Mexico tariff plan raises concerns in Texas

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Posted: Saturday, June 1, 2019 10:35 am

President Donald Trump’s latest trade threat, the imposition of a 5-percent tariff on all goods imported to the United States from Mexico, isn’t sitting well with Texas business and political leaders.

Organizations dedicated to promoting cross-border trade, for example, are opposed. The Border Trade Alliance’s chairman called the tariff “totally and completely unnecessary.”

Mexico, largest trading partner to Texas and third largest to the United States, will be hit with a 5-percent tariff starting June 10, the administration said Thursday. The tariff will increase by 5 percent each month until reaching 25 percent on Oct. 1, according to the White House, which said the tariff will remain at that level “until Mexico substantially stops the illegal inflow of aliens coming through its territory.”

The peso sank in response to the news, though the administration’s move appears based on the incorrect idea that Mexico will pay the tariff, when in fact U.S. importers will shoulder the burden, likely passing some of the extra cost on to U.S. consumers. Wall Street also slid upon news of the tariff.

Mexican exports to the United States totaled $371.9 billion last year, according to the Office of the U.S. Trade Representative, with cars and trucks manufactured in Mexico topping the list that also includes but is not limited to electronics, machinery, fruits and vegetables, minerals, plastics, precious metals and beer.

Everything Mexico imports to the United States will become more expensive for U.S. consumers if the tariff stands. Texas imported more than $107 billion in goods from Mexico last year, and would be hit with a nearly $27 billion tax if Trump’s 25-percent tariff actually comes to pass, according to estimates.

BTA Chairman Paola Avila said implementing tariffs on Mexico “is exactly the wrong policy to pursue” and could derail progress toward the new USMCA trade agreement to replace NAFTA.

“The president’s plan, if executed, will do tremendous harm to our relationship with Mexico, to our country’s ability to adopt new trade agreements going forward, and to U.S. consumers, who will be the ones who will pay for these tariffs,” she said.

BTA President Britton Clarke said the United States should be focusing its “resources and goodwill” toward passage of the USMCA rather than hitting Mexico with tariffs.

“Imposing tariffs on our trading partner Mexico will do severe damage to that effort,” she said. “USMCA and NAFTA are about tearing down tariffs and strengthening the bonds of our two economies. This announcement will only hurt the American consumer and will be a tremendous drag on the U.S. economy.”

U.S. Rep. Filemon Vela called the administration’s attempt to use tariffs as leverage against Mexico over migration is “clearly insane, but in no way surprising.”

“This is one more erratic and nonsensical action from an accidental president whose approach to problem solving is to create a problem to extort a solution,” Vela said. “His multi-year obsession with border wall funding at the expense of all other rational security measures has clearly resulted in a border policy that is an abysmal failure.”

The administration’s recent decision to strip customs officials of their usual duties of policing legitimate trade and travel is already drastically impeding international commercial traffic on the southern border, he said.

“This latest tariff decision is equally drastic and makes no sense,” Vela said.

U.S. Rep. Vicente Gonzalez also criticized the White House announcement, noting that the U.S. and Mexican economies are “intrinsically intertwined.”

“Levying tariffs against our most important trading partner would be irresponsible, fail to achieve the president’s desired result, and hurt American consumers in the process,” he said.

Gonzalez said the president is again turning to “punitive and coercive policies that are a far cry from addressing the root causes of the real issues at hand.”

A number of GOP lawmakers joined Democrats in condemning the tariff threat, warning that it could blow up progress in passage of the new trade deal, which appeared to be getting closer. According to U.S. Sen. John Cornyn’s office, the senator supports the White House’s commitment to border security but opposes a blanket tariff on Mexico that will disproportionately hurt Texans.

Texas Comptroller Glen Hegar also backs the president on border security, but said the “free flow of goods between Texas and Mexico is critical to the Texas economy.”

“Significant reduction in trade with Mexico undoubtedly will have a dampening effect on both the Texas and national economies,” he said.

Roughly 40 percent of Texas’ trade volume is with Mexico, and the negative impact felt statewide would probably spread rapidly throughout the country, Hegar said, urging leaders from both nations “to find a swift and lasting resolution to this issue.”

The Texas Border Coalition also weighed in, TBC Chairman and Laredo Mayor Pete Saenz strongly criticizing the administration move.

“The Texas Border Coalition strongly opposes President Trump’s threat to impose unilateral tariffs on Mexican imports,” he said in a statement.

Saenz said the tariff may not even be legal or constitutional, and probably violate international agreements underlying NAFTA and the World Trade Organization. Imposing tariffs would probably just make the situation worse for border communities struggling to help the “crushing numbers” of Central American asylum seekers, he said.

“Over the next few days, TBC will work with our partners and allies to identify and pursue appropriate legal and legislative measures to remedy the president’s threat,” Saenz said.

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