Trump Promises Tariffs on All Mexican Goods Starting June 10th

Steph Willems
by Steph Willems
trump promises tariffs on all mexican goods starting june 10th

Just when it seemed the trade climate in the North American region was easing, President Donald Trump launched a new salvo late Thursday, promising a 5 percent levy on all Mexican goods crossing the U.S. border if the country doesn’t stem the flow of illegal migrants.

The tariff would land on all Mexican goods on June 10th, ramping up to 10 percent on July 1 before topping out at 25 percent by October. For automakers and those who sell (and buy) the final product, the prospect of a new import levy is the stuff of nightmares.

Earlier this month, the White House removed steel and aluminum tariffs imposed on the U.S.’s northern and southern neighbors while moving forward with the USMCA trade deal. The U.S. hopes to ratify the deal this summer, with CNBC reporting that U.S. Trade Representative Robert Lighthizer has submitted a draft Statement of Administrative Action, paving the way for the deal’s Congressional consideration.

While yesterday’s tariff threat mirrors past threats from the Trump administration, this one comes with a deadline. It also came on the same day Mexican President Andres Manuel Lopez Obrador sent the renegotiated trade deal for Senate approval.

Mexican goods accounted for 13.6 percent of all goods entering the U.S. last year. The tally totalled $346.5 billion, with produce and vehicles/auto components ranking high on the list.

In a statement citing the International Emergency Economic Powers Act, the White House said:

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. Similarly, if Mexico still has not taken action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States, Tariffs will be increased to 15 percent on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019. Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.

Domestic automakers like General Motors stand to be hit hard in such a scenario. As Automotive News reports, GM exported over 811,000 cars and light trucks from its Mexican factories last year.

“Margins are so thin in the U.S. market right now that there’s no way that any automaker is not going to pass on these tariffs to their customers,” Macquarie Securities analyst Janet Lewis told the publication.

“The unknown factor is the impact on suppliers, as components can move back and forth between Mexico, the United States and Canada up to 20 times before they make their way into assembled cars.”

As one would expect, the shares of automakers with a significant Mexican footprint fell in Friday pre-trading.

[Image: General Motors]

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  • DeadWeight DeadWeight on Jun 01, 2019

    PUTTING THE GUADALAJARA IN GUANGZHOU-GUADALAJARA MOTORS! "GUADALAJARA MOTORS imported 811,000 vehicles from MEXICO in 2018." "General Motors stand to be hit hard in such a scenario. As Automotive News reports, GM exported over 811,000 cars and light trucks from its Mexican factories last year." Support General Motors, which supports China and Mexico! Buy a RAM, F-150, Accord or Camry!

  • Namesakeone Namesakeone on Jun 02, 2019

    Why (and I sincerely ask anyone who cares to, please enlighten me) do I think that, if America does manage to shut down the Mexican border, that the automakers (and producers of pretty much any consumer good that requires substantial assembly) will be looking to China? Or any other third-world nation they can spell?

  • Jeff S I am not a fan of Tesla and they were niche vehicles but it seems that they have become more common. I doubt if I get an EV that it would be a Tesla. The electrical grid will have to be expanded because people over the long run are not going to accept the excuse of the grid can't handle people charging their EVs.
  • AMcA The '70 Continentals and Town Cars may have been cousins to the standard body Fords and Mercurys, they didn't have to be disguised, because they had unique, unbelievably huge bodies of their own. Looking at the new 1970 interior, I'd say it was also a cost savings in sewing the seat. Button tufted panels like the 1969 interior had require a lot of sewing and tufting work. The 1970 interior is mostly surface sewing on a single sheet of upholstery instead of laboriously assembled smaller pieces. FINALLY: do I remember correctly that the shag carpet shown under these cars was a Photoshop? They didn't really go so peak '70s as to photograph cars on shag carpets, did they?
  • Inside Looking Out Toyota makes mass market cars. Their statement means that EVs are not mass market yet. But then Tesla managed to make mass market car - Mode; 3. Where I live in CA there are more Tesla Model 3s on streets than Corollas.
  • Ltcmgm78 A lot of dirt must turn before there's an EV in every driveway. There must be a national infrastructure plan written by other than politicians chasing votes. There must be reliable batteries that hopefully aren't sourced from strategic rivals. There must be a way to charge a lot of EVs. Toyota is wisely holding their water. There is a danger in urging unplanned and hasty moves away from ICE vehicles. Do we want to listen to unending speeches every election cycle that we are closer than we have ever been to 100% electrification and that voting for certain folks will make it happen faster? Picture every car in your town suddenly becoming all electric and a third of them need a charge or the driver will be late for work. This will take a lot of time and money.
  • Kendahl One thing I've learned is that cars I buy for local errands tend to be taken on 1,000 mile trips, too. We have a 5-speed Focus SE that has gone on longer trips than I ever expected. It has served us well although, if I had it to do over again, I would have bought an ST. At the time of purchase, we didn't plan to move from 1,000 feet elevation to 6,500. The SE is still adequate but the ST's turbo and extra power would have been welcome.