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| Trump’s Tariff Threat Sends Mexico, Lawmakers and Businesses Scrambling | Trump’s Tariff Threat Sends Mexico, Lawmakers and Businesses Scrambling |
| (32 minutes later) | |
| WASHINGTON — President Trump’s threat to punish Mexico with tariffs until it restrains the flow of migrants rattled financial markets on Friday, and the Mexican government, American businesses and Republican lawmakers pressed Mr. Trump to back down. | WASHINGTON — President Trump’s threat to punish Mexico with tariffs until it restrains the flow of migrants rattled financial markets on Friday, and the Mexican government, American businesses and Republican lawmakers pressed Mr. Trump to back down. |
| The president has made frequent use of tariffs to try to force trade concessions from other governments, including Mexico, Canada, China and Europe. But he escalated his aggressive approach by threatening to hit a United States ally and its largest trading partner with tariffs over concerns about immigration. | |
| Some Republican lawmakers, who rarely challenge the president, objected to the move, saying tariffs were the wrong tool to address illegal immigration. Two of Mr. Trump’s top economic advisers, including his trade representative, Robert Lighthizer, have also raised concerns about the tariffs, people familiar with the situation said. | |
| Mr. Trump, who said he was invoking emergency powers to impose tariffs of up to 25 percent on all Mexican goods, showed no signs of relenting. He said that he would proceed with an initial 5 percent tariff on June 10, which could hurt American consumers and some of its biggest companies, including automakers, agricultural companies and retailers. | Mr. Trump, who said he was invoking emergency powers to impose tariffs of up to 25 percent on all Mexican goods, showed no signs of relenting. He said that he would proceed with an initial 5 percent tariff on June 10, which could hurt American consumers and some of its biggest companies, including automakers, agricultural companies and retailers. |
| “Mexico makes a FORTUNE from the U.S., have for decades, they can easily fix this problem,” the president said on Twitter. | “Mexico makes a FORTUNE from the U.S., have for decades, they can easily fix this problem,” the president said on Twitter. |
| Stock prices slid on Friday, continuing a monthlong retreat, with the S&P 500 down nearly 6 percent this month and the bond market flashing worrying signs of a global recession. Shares in General Motors fell by more than 4 percent, while shares of Ford were down 2 percent. | Stock prices slid on Friday, continuing a monthlong retreat, with the S&P 500 down nearly 6 percent this month and the bond market flashing worrying signs of a global recession. Shares in General Motors fell by more than 4 percent, while shares of Ford were down 2 percent. |
| Mexico quickly dispatched its foreign minister, Marcelo Ebrand, to Washington to try to dissuade the president from imposing the levies, and he is expected to meet on Wednesday with Secretary of State Mike Pompeo in Washington. | Mexico quickly dispatched its foreign minister, Marcelo Ebrand, to Washington to try to dissuade the president from imposing the levies, and he is expected to meet on Wednesday with Secretary of State Mike Pompeo in Washington. |
| In a measured letter to his American counterpart, President Andrés Manuel López Obrador said that he did not want confrontation and that Mexico was doing as much as possible to stem the flow of migrants “without violating human rights.” | In a measured letter to his American counterpart, President Andrés Manuel López Obrador said that he did not want confrontation and that Mexico was doing as much as possible to stem the flow of migrants “without violating human rights.” |
| Officials with the U.S. Chamber of Commerce, the nation’s largest business group, said they were exploring the grounds on which they might mount a legal challenge. “Given the gravity of the situation we have to explore all our options,” said Neil Bradley, the chief policy officer at the chamber. | Officials with the U.S. Chamber of Commerce, the nation’s largest business group, said they were exploring the grounds on which they might mount a legal challenge. “Given the gravity of the situation we have to explore all our options,” said Neil Bradley, the chief policy officer at the chamber. |
| 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. | 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. |
| [Read more on how stocks were bracing for another wild ride on Friday.] | [Read more on how stocks were bracing for another wild ride on Friday.] |
| On Friday night, the Trump administration announced that on June 5, it would strip India of a special status that exempts billions of dollars of its products from American tariffs, raising new trade tensions with the world’s second-most populous country. The move was taken as retaliation for what Mr. Trump said was India’s failure to provide “equitable and reasonable access to its markets.” | On Friday night, the Trump administration announced that on June 5, it would strip India of a special status that exempts billions of dollars of its products from American tariffs, raising new trade tensions with the world’s second-most populous country. The move was taken as retaliation for what Mr. Trump said was India’s failure to provide “equitable and reasonable access to its markets.” |
| 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. | 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. | “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. | 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 like 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. | The United States imported about $347 billion of goods from Mexico last year, covering items like 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. |
| “The White House will need to pass out neck braces if this trade policy whiplash continues for much longer,” said Kip Eideberg, a vice president at the Association of Equipment Manufacturers, which represents companies like Caterpillar and John Deere. | “The White House will need to pass out neck braces if this trade policy whiplash continues for much longer,” said Kip Eideberg, a vice president at the Association of Equipment Manufacturers, which represents companies like Caterpillar and John Deere. |
| Mr. Trump’s latest move could also effectively kill one of his primary policy goals — getting Congress to pass a revised North American trade pact, known as the United States-Mexico-Canada Agreement. Democrats have already resisted Mr. Trump’s entreaties to pass the agreement, and the new threat could be its death knell. | Mr. Trump’s latest move could also effectively kill one of his primary policy goals — getting Congress to pass a revised North American trade pact, known as the United States-Mexico-Canada Agreement. Democrats have already resisted Mr. Trump’s entreaties to pass the agreement, and the new threat could be its death knell. |
| [How President Trump’s policies are challenging the post-World War II consensus that free trade enriches the world.] | [How President Trump’s policies are challenging the post-World War II consensus that free trade enriches the world.] |
| Senator Charles E. Grassley, Republican of Iowa, warned that following through with the tariffs “would seriously jeopardize passage of U.S.M.C.A., a central campaign pledge of President Trump’s and what could be a big victory for the country.” | Senator Charles E. Grassley, Republican of Iowa, warned that following through with the tariffs “would seriously jeopardize passage of U.S.M.C.A., a central campaign pledge of President Trump’s and what could be a big victory for the country.” |
| “I urge the president to consider other options,” he said. | “I urge the president to consider other options,” he said. |
| The new threat of levies against Mexico comes less than two weeks after the administration agreed to lift its tariffs on Mexican and Canadian steel and aluminum, which both the administration and lawmakers greeted as a major step toward passing the revised pact into law. | The new threat of levies against Mexico comes less than two weeks after the administration agreed to lift its tariffs on Mexican and Canadian steel and aluminum, which both the administration and lawmakers greeted as a major step toward passing the revised pact into law. |
| At the White House, Mr. Lighthizer has been particularly worried about the effect on the trade pact he has spent the last year and a half negotiating, and the Treasury secretary, Steven Mnuchin, also raised concerns. | At the White House, Mr. Lighthizer has been particularly worried about the effect on the trade pact he has spent the last year and a half negotiating, and the Treasury secretary, Steven Mnuchin, also raised concerns. |
| But Mr. Trump’s acting chief of staff, Mick Mulvaney, publicly pushed back on the argument, saying the new tariffs should not have any impact. | But Mr. Trump’s acting chief of staff, Mick Mulvaney, publicly pushed back on the argument, saying the new tariffs should not have any impact. |
| “These are not tariffs as part of a trade dispute. These are tariffs as part of an immigration problem,” Mr. Mulvaney said in a call with reporters Thursday night. He added that passage of the trade deal was “absolutely not linked” to the tariffs threat. | “These are not tariffs as part of a trade dispute. These are tariffs as part of an immigration problem,” Mr. Mulvaney said in a call with reporters Thursday night. He added that passage of the trade deal was “absolutely not linked” to the tariffs threat. |
| “The U.S.M.C.A. is a trade matter and completely separate,” Mr. Mulvaney said. | “The U.S.M.C.A. is a trade matter and completely separate,” Mr. Mulvaney said. |
| However, Peter Navarro, a top adviser to Mr. Trump, suggested the issue was a matter of trade, saying on CNBC that the tariffs would punish Mexico’s “export” of “illegal immigrants.” | However, Peter Navarro, a top adviser to Mr. Trump, suggested the issue was a matter of trade, saying on CNBC that the tariffs would punish Mexico’s “export” of “illegal immigrants.” |
| In some ways, the Democrats’ resistance to approving the revised trade pact may have given the president more leeway to act against Mexico. Speaker Nancy Pelosi, who plays an outsize role in determining whether the deal gets a House vote, has resisted pressure from the administration to move quickly on the new pact. | In some ways, the Democrats’ resistance to approving the revised trade pact may have given the president more leeway to act against Mexico. Speaker Nancy Pelosi, who plays an outsize role in determining whether the deal gets a House vote, has resisted pressure from the administration to move quickly on the new pact. |
| In deciding to impose tariffs, the president appears to have taken a calculated risk that Democrats were a bigger impediment to his signature trade deal than tariffs and that threatening Mexico could help him achieve his other big goal: curbing illegal immigration. | In deciding to impose tariffs, the president appears to have taken a calculated risk that Democrats were a bigger impediment to his signature trade deal than tariffs and that threatening Mexico could help him achieve his other big goal: curbing illegal immigration. |
| Mr. Trump has grown increasingly frustrated by the flood of migrants into the United States — most of them Central Americans fleeing poverty and violence — and the Mexican government’s inability to stop the flow. | Mr. Trump has grown increasingly frustrated by the flood of migrants into the United States — most of them Central Americans fleeing poverty and violence — and the Mexican government’s inability to stop the flow. |
| In April, Customs and Border Protection officials encountered 109,144 migrants at the southwestern border, the highest total since 2007. The acting secretary of homeland security, Kevin McAleenan, said on Thursday that the total figure for May was on pace to break that record “significantly.” | In April, Customs and Border Protection officials encountered 109,144 migrants at the southwestern border, the highest total since 2007. The acting secretary of homeland security, Kevin McAleenan, said on Thursday that the total figure for May was on pace to break that record “significantly.” |
| On Wednesday, a day before the president announced the tariffs, a group of 1,036 migrants, many of them families, surrendered to Border Patrol agents in El Paso, the largest group ever apprehended at the border, Mr. McAleenan said. | On Wednesday, a day before the president announced the tariffs, a group of 1,036 migrants, many of them families, surrendered to Border Patrol agents in El Paso, the largest group ever apprehended at the border, Mr. McAleenan said. |
| Mr. Trump’s fury over the border crossings has grown since January, when congressional Democrats refused his request for billions of dollars of funding for a long-promised border wall. | Mr. Trump’s fury over the border crossings has grown since January, when congressional Democrats refused his request for billions of dollars of funding for a long-promised border wall. |
| In March, Mr. Trump moved to cut off all foreign aid to Guatemala, Honduras and El Salvador and threatened to close the border entirely, but was talked down by advisers who said the disruption in the flow of goods and people could have severe consequences for the economy. In April, he threatened a 25 percent tariff on cars imported from Mexico if it did not take bigger steps to stop the border crossings. | In March, Mr. Trump moved to cut off all foreign aid to Guatemala, Honduras and El Salvador and threatened to close the border entirely, but was talked down by advisers who said the disruption in the flow of goods and people could have severe consequences for the economy. In April, he threatened a 25 percent tariff on cars imported from Mexico if it did not take bigger steps to stop the border crossings. |
| Under a two-year agreement signed this week with Guatemala, the Department of Homeland Security will assign about 80 agents there to help train and advise local authorities. | Under a two-year agreement signed this week with Guatemala, the Department of Homeland Security will assign about 80 agents there to help train and advise local authorities. |
| That figure includes dozens of Border Patrol agents, who will help Guatemalan law enforcement officers build checkpoints and make sure incoming migrants from Honduras or El Salvador are carrying legal immigration documents. The American agents will be deployed from their current stations along the United States’ northern and southwestern borders. | That figure includes dozens of Border Patrol agents, who will help Guatemalan law enforcement officers build checkpoints and make sure incoming migrants from Honduras or El Salvador are carrying legal immigration documents. The American agents will be deployed from their current stations along the United States’ northern and southwestern borders. |
| Additionally, Homeland Security investigators will advise the local police and provide investigative tools, like wiretaps, to stop human trafficking in Guatemala. | Additionally, Homeland Security investigators will advise the local police and provide investigative tools, like wiretaps, to stop human trafficking in Guatemala. |
| Sarah Huckabee Sanders, the White House press secretary, said that if lawmakers had concerns about the president’s threat, they should fund the border wall. | Sarah Huckabee Sanders, the White House press secretary, said that if lawmakers had concerns about the president’s threat, they should fund the border wall. |
| “Frankly, Congress should actually fix the laws and we wouldn’t have this problem,” she said. “Mexico should engage with us and we wouldn’t have to take any additional steps.” | “Frankly, Congress should actually fix the laws and we wouldn’t have this problem,” she said. “Mexico should engage with us and we wouldn’t have to take any additional steps.” |
| Mr. Trump’s abrupt decision could further complicate his ability to win a trade deal with other nations. Europe, Japan, China and other countries are contemplating entering into agreements with the United States and could view the move as a warning sign that Mr. Trump may not honor them and could impose tariffs over anything he deems problematic for the United States, including areas outside of trade policy. | Mr. Trump’s abrupt decision could further complicate his ability to win a trade deal with other nations. Europe, Japan, China and other countries are contemplating entering into agreements with the United States and could view the move as a warning sign that Mr. Trump may not honor them and could impose tariffs over anything he deems problematic for the United States, including areas outside of trade policy. |
| “It’s hard to imagine every single country in the world is not paying attention to this,” said Jorge Guajardo, Mexico’s former ambassador to China and a former consul general of Mexico to the United States. The revised trade pact “was an example of how to reach an agreement with the United States, and it’s just been undone over something that has nothing to do with trade.” | “It’s hard to imagine every single country in the world is not paying attention to this,” said Jorge Guajardo, Mexico’s former ambassador to China and a former consul general of Mexico to the United States. The revised trade pact “was an example of how to reach an agreement with the United States, and it’s just been undone over something that has nothing to do with trade.” |
| Even some of Mr. Trump’s staunchest allies in Congress seemed perplexed by the move, though it was unclear whether they would take any action to stop it. | Even some of Mr. Trump’s staunchest allies in Congress seemed perplexed by the move, though it was unclear whether they would take any action to stop it. |
| Senator Mitch McConnell of Kentucky, the majority leader, said that there was “a serious humanitarian crisis” at the southwestern border but added that a healthy economic relationship with Mexico was vital to American prosperity. “Any proposal that impacts this relationship deserves serious examination,” he said. | Senator Mitch McConnell of Kentucky, the majority leader, said that there was “a serious humanitarian crisis” at the southwestern border but added that a healthy economic relationship with Mexico was vital to American prosperity. “Any proposal that impacts this relationship deserves serious examination,” he said. |