President Trump surprised just about everyone when he threatened to tariff Mexican imports at a rate reaching 25% by October unless they do more to halt the flow of illegal immigrants. The President was criticized harshly and immediately by leaders of both parties. The US Chamber of Commerce even threatened legal action to block the tariffs.
Trump’s critics are correct on economic grounds. Tariffs are simply taxes that increase prices and limit consumer choices. A 25% tariff would be crippling to firms in auto and other industries with strong ties to Mexico. Moreover, strengthening economic ties with our Mexican neighbors could add leverage to negotiations with the Chinese. There are lots of good reasons to avoid the tariffs. The President clearly understands the importance of North American trade or he would not have negotiated the USMCA.
But there’s more to the story than economics. Resolving the illegal immigration crisis requires common sense legislative reform, stronger enforcement and immigration processing, and genuine border security. But Mexico is the linchpin in the effort and needs to do more. Tariffs would hurt US consumers but could devastate the Mexican economy. President Lopez Obrador has threatened to retaliate if tariffs are enacted, but it’s obvious that Mexico has much more to lose. The tariff threat is a way to get their attention.
Strong North American economic interdependence is certainly in the US interest and I hope that tariffs can be avoided. Nonetheless, I support President Trump’s effort to engage the Mexican government in resolving the illegal immigration problem. He has signaled that he is willing to work with Mexico, but they must do more.