Trump’s Tariff Threat Sends Mexico, Lawmakers and Businesses Scrambling – The New York Times

The move capped a furious month of cross-border tariff threats that have rattled investors and raised economists’ concerns about a slowdown in global growth. Only three weeks ago, Mr. Trump increased tariffs on $200 billion worth of Chinese goods and started the process of taxing nearly everything China sends into the United States. The president has also threatened auto tariffs on Europe and Japan, setting a six-month deadline for those governments to reach a trade agreement with the United States.

Most economists have warned that large and sustained tariff increases, along with likely retaliation against American farmers and other exporters, will dampen global trade and drag on growth in the United States.

“We don’t know what straw will break the camel’s back here, but Trump is looking like he wants to try to find out,” Timothy Duy, an economist at the University of Oregon, wrote in a blog post on Friday.

Imposing tariffs on Mexican products would be particularly damaging given the tight integration of businesses across North America. Companies like General Motors, Ford and others have built their supply chains around the North American Free Trade Agreement, with borderless operations stretching across Canada, Mexico and the United States.

The United States imported about $347 billion of goods from Mexico last year, covering items ranging from cars, dishwashers, avocados and mangoes. If tariffs are fully put in place at 25 percent, it would be the equivalent of an $87 billion annual tax increase.

It could also effectively kill one of Mr. Trump’s primary policy goals — getting Congress to pass a revised North American trade pact. Democrats have already resisted Mr. Trump’s entreaties to pass the pact, known as the United States-Mexico-Canada Agreement, and the new tariff threat could be its death knell. The president’s move is quickly souring relations with Mexico, as well as the Republicans and business owners that are crucial to getting his North American trade deal passed into law.


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