New 5% Tariff On All Imports From Mexico

US President Donald Trump announced on Thursday that the US will be imposing a 5% tariff on all imports from Mexico, effective June 10th.

The move was first announced by Trump in an evening Twitter post, and the possibility of further tariffs is on the table.

The US will start with a universal 5% tariff on Mexican imports, with new duties on the table should Mexico not “reduce or eliminate the number of illegal aliens” crossing into the US. The announcement by the White House comes in spite of the fact that US congressional leaders are possibly set to kick-start the process of updating the North American Free Trade Agreement (NAFTA). US Trade Representative Robert Lighthizer sent a letter to congress on Thursday asking lawmakers to push the updates to NAFTA forward.

The US imported approximately $346.5 billion in goods from Mexico last year, which is an increase of over 10% from 2017. Mexico is a critical trade partner to the United States, with Mexican goods making up 13.6% of all of America’s imports last year.

The reason for the tariffs wasn’t economic in nature, however, as it is in the case of China. The Tariffs were announced in the context of slowing down or stopping illegal immigration into the US via the US-Mexican land border. “If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed. If the crisis persists, however, the Tariffs will be raised to 10 percent on July 1, 2019,” the White House reported. From there, the duties will increase by 5% on the first of each month, holding permanently at 25%, effective October 1st if the White House’s demands aren’t met. From that point, the White House intends to keep duties frozen at 25% until they are satisfied with Mexico’s course of action regarding illegal immigration at the border.

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