Canadian Manufacturing

With Trump’s new tariff threats, USMCA once again hangs in the balance

Ratification of the trade pact could be derailed by U.S. tariffs on Mexico motivated by immigration gripes

May 31, 2019  The Canadian Press

President Trump, Prime Minister Trudeau and Mexican President Enrique Peña Nieto sign the US-Mexico-Canada trade agreement Nov. 30, 2018.

OTTAWA—President Donald Trump says he’ll put tariffs on all goods from Mexico starting next month, a surprise move that could blow up chances of ratifying the new North American free-trade agreement.

Beginning with a series of tweets late Thursday, just hours after U.S. Vice-President Mike Pence’s whirlwind trip to Ottawa to push the trade agreement forward, Trump said he wants Mexico to stop migrants from Central and South America from reaching the U.S. border.

Related: Pence pledges solidarity, aligns freedom of Canadians held in China with trade

“For decades, the United States has suffered the severe and dangerous consequences of illegal immigration,” the president said in a followup statement issued via the White House. “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.”


Unless it does, he said, he’ll tax all imports to the U.S. from Mexico beginning June 10, with tariffs starting at 5% and increasing to 25% by October.

Related: Trump gets pushback on promise of new Mexican tariffs

“Should Mexico choose not to co-operate on reducing unlawful migration, the sustained imposition of Tariffs will produce a massive return of jobs back to American cities and towns. Remember, our great country has been the “piggy bank” from which everybody wants only to TAKE.“

A week ago, the United States lifted tariffs on steel and aluminum from Canada and Mexico, which both countries said were standing in the way of ratifying the new three-country trade deal they signed at the end of last year. The new tariffs Trump is threatening for Mexico would be much broader and end up higher than the ones he just took off.

The new trade agreement doesn’t kick in until it’s approved by lawmakers in all three countries.

Prime Minister Justin Trudeau introduced the bill that would do it in Canada earlier this week. The clock is ticking loudly, with just a few weeks before the House of Commons is to break for the summer. It’s not expected to sit again before the fall election.

In the United States, ratification is stalled on Capitol Hill by Democrats who want stronger protections for environmental and labour standards, to the point of asking for negotiations to be reopened; Pence said Thursday that he believes Congress can make major progress on ratification this summer all the same.

In Mexico, President Andres Manuel Lopez Obrador had just sent the new agreement to the Mexican Senate for approval later this year.

Friday, Lopez Obrador’s trade negotiator called Trump’s threat “most serious” but held back on harsh criticism. Jesus Seade said if the United States imposes new tariffs Mexico will have to respond forcefully but he wants to see how real the threat is.

A senior member of Trump’s party, Iowa Sen. Chuck Grassley, said Trump’s fresh tariff threats are bad strategy. The Republican, who chairs the Senate’s finance committee, said it’s a mistake to combine trade policy and border security.

—With files from The Associated Press