Markets in turmoil after Trump threatens Mexico with steep tariffs

Trump claims his Mexican border tariffs are ‘about stopping drugs as well as illegals’ amid market plunge

  • Trump announced tariffs on Mexico of 5 percent beginning on June 10
  • Said in tweets that he’d raise them gradually until illegal immigration stops
  • Dow opened 270 points down on Friday on news of the tariffs and fluctuated
  • Mexico’s President Andrés Manuel López Obrador meanwhile sent his foreign secretary to Washington for emergency discussions
  • Senate Finance Chairman Chuck Grassley said tariffs are a ‘misuse’ of Trump’s tariff authority, because they’re about border security and not trade
  • Said tariffs would endanger Trump’s renegotiated trade deal with Mexico 
  • President insisted in a tweet that tariffs are about all of the above and drugs 
  • White House says Trump want Mexico to break up caravans and keep Central American migrants from crossing over into the United States 

The markets opened 270 points down on Friday morning, after President Trump threatened steep tariffs on Mexico.

Trump put his opening bid at 5 percent and said he’d gradually increase them, until Mexico takes a harder line on immigration. 

He wants the border country to break up caravans and take Central American migrants into custody before they reach the United States, his press secretary told reporters at the White House after a Fox News appearance.

‘We’ve been giving them warning for months,’ she declared, claiming that anyone, including Republican lawmakers who were surprised have been ‘living under a rock.’  

President Trump added to his spokeswoman’s explanation in tweets that prodded the Mexican government to curb cartel activity, too.

‘In order not to pay Tariffs, if they start rising, companies will leave Mexico, which has taken 30% of our Auto Industry, and come back home to the USA. Mexico must take back their country from the drug lords and cartels. The Tariff is about stopping drugs as well as illegals!’ he stated.  

The markets opened 270 points down on Friday morning, after President Trump threatened steep tariffs on Mexico 

Trump said he’d gradually increase them, until Mexico takes a harder line on immigration  

The market reacted poorly to Trump’s pledge to put 5 percent tariffs on Mexico on June 10

Tariffs are also about reducing the trade deficit with Mexico, he claimed.

‘This has gone on for many years & nothing has been done about it. We have a 100 Billion Dollar Trade Deficit with Mexico. It’s time!’ he stated. 

Trump was responding to a senior Republican senator’s complaint that his anticipated action is a ‘misuse’ of presidential trade authority and tariffs should not be weaponized to combat illegal immigration.

‘Trade policy and border security are separate issues. This is a misuse of presidential tariff authority and counter to congressional intent. Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country,’ Sen. Chuck Grassley said.

Grassley is the chairman of the Senate Finance Committee, which has jurisdiction over Trump’s renegotiated trade deal with Canada and Mexico, also known as the USMCA. 

Mexican President Andrés Manuel López Obrador meanwhile dispatched his foreign secretary to Washington to try to stop the president from following through on his threat to impose penalties on Mexican goods on June 10 unless the country makes unspecified progress on his demands. 

In a surprise announcement that could compromise a major trade deal, Trump tweeted news of the tariff on Thursday in a bid to pressure Mexico to do more to crack down in the surge of migrants trying to cross the U.S. border. 

The tariffs will start at 5 percent on June 10 before jumping to 10 percent on July 1, 15 percent on August 1, 20 percent on September 1 and go up to 25 percent on October 1 unless Mexico takes steps to stop the surge. 

‘On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,’ he said in Thursday night tweets, ‘at which time the Tariffs will be removed. Details from the White House to follow.’ 

Trump’s surprise threat to take action – which he’d vaguely previewed a day before as a major announcement on the border – cause the markets to tumble on Friday.

As the Dow plunged, the president continue to tweet about immigration, insisting he was correct. 

‘Hard to believe that with the Crisis on the Border, the Dems won’t do the quick and easy fix. Would solve the problem but they want Open Borders, which equals crime!’ he said.

Trump tweeted” Mexico has taken advantage of the United States for decades. Because of the Dems, our Immigration Laws are BAD. Mexico makes a FORTUNE from the U.S., have for decades, they can easily fix this problem. Time for them to finally do what must be done!’

‘The Tariff will gradually increase until the Illegal Immigration problem is remedied at which time the Tariffs will be removed.’

In a follow up statement from the White House, Trump said the tariff’s would permanently remain at 25 percent until ‘Mexico substantially stops the illegal inflow of aliens’.  

Trump’s move was a dramatic escalation of his battle to control a tide of illegal immigrants that has increased despite his efforts to build a border wall and take other steps.

U.S. officials said 80,000 people are being held in custody with an average of 4,500 arriving daily.

‘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,’ Trump said.

Mexico’s deputy foreign minister for North America, Jesus Seade, said on Thursday that it would be disastrous if Trump goes through with his threat to impose the tariffs.

‘It would be extremely serious… If this is put in place, we must respond vigorously,’ Seade said.  

Trump’s announcement came a day after border agents in El Paso, Texas detained the largest single group of migrants they had ever encountered – 1,036 people. They are pictured above after being detained

The group of 1,036 people crossed the Rio Grande River from Ciudad Juarez, Mexico in the early morning hours of Wednesday

Trump said he was acting under the powers granted to him by the International Emergency Economic Powers Act. 

He campaigned for election in 2016 on a vow to crack down on illegal immigration and has been frustrated that the flow has increased in recent months.

‘Mexico’s passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States,’ Trump said in the statement.

‘Mexico has very strong immigration laws and could easily halt the illegal flow of migrants, including by returning them to their home countries,’ he said.

White House acting chief of staff Mick Mulvaney, asked in a conference call with reporters which products from Mexico could be affected by the tariffs, said: ‘All of them.’

Trump has accused the Mexican government of failing to do enough to halt the flow of Central American migrants who have been flowing to the U.S in search of asylum from countries including El Salvador, Honduras and Guatemala. 

He has been itching to take increasingly radical, headline-grabbing action on the issue, which he sees as critical to his reelection campaign because it energizes his base.  

A US Customs and Border Protection CCTV video image shows the undocumented migrants crossing the Rio Grande River into El Paso, Texas on Wednesday

Trump tweeted a surveillance video of a large group of immigrants being wrangled by Border Patrol agents 

But the sudden tariff threat comes at a peculiar time, given how hard the administration has been pushing for passage of the United States-Mexico-Canada Agreement that would update the North American Free Trade Agreement. 

It also comes less than two weeks after Trump lifted import taxes on Mexican and Canadian steel and aluminum, a move that seemed to clear an obstacle to passage of his North American trade deal. 

The White House sees the deal, which was agreed to by the three nations’ leaders in November, as the cornerstone of Trump’s 2020 legislative agenda but it needs approval from lawmakers in all three countries for it to be ratified. 

Trump’s announcement came a day after border agents in El Paso, Texas detained the largest single group of migrants they had ever encountered – 1,036 people.  

The group crossed the Rio Grande River from Ciudad Juarez, Mexico in the early morning hours of Wednesday, illustrating the mounting problem that Trump’s administration has been unable to get under control.

The El Paso group comprised of entire families, 39 single adults and 63 unaccompanied minors, all from Guatemala, Honduras or El Salvador, according to US Customs and Border Protection 

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