In a move that could damage the Arizona economy, President Trump late Thursday declared he intends to impose a 5 percent tariff on Mexican imports — potentially rising to 25 percent..
The action, first announced in a Twitter post, comes as the president is increasingly frustrated with migrants from Nicaragua, El Salvador and Honduras showing up at the U.S. border and seeking asylum. And it comes just hours after Trump, speaking at the White House, vowed “very dramatic” action to address the situation.
“On June 10th, the United States will impose a 5 percent 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 president said in the posting. But that’s not where it’s going to end.
Trump, in a follow-up prepared statement, said the tariffs will go to 10 percent on July 1, 15 percent a month later, 20 percent a month after that, and finally 25 percent by Oct. 1.
“Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” the statement reads. And it says that the question of whether Mexico has taken the proper steps to stem the flow − and whether to end the tariffs − is “to be determined in our sole discretion and judgment.”
Gov. Doug Ducey, in a prepared statement, appeared to side with the president despite the economic risks to the state.
“I prioritize national security and a solution to our humanitarian crisis at the border above commerce,” he said, despite what the governor said is his personal opposition to tariffs. Ducey said he has reached out to “our friends in Mexico,” including elected officials, law enforcement and the faith community to “work together to alleviate this crisis.”
But Glenn Hamer, president of the Arizona Chamber of Commerce and Industry, said the president’s announcement is “baffling and, if carried out, will be terribly damaging.”
“This will only inflict harm on the U.S. consumer,” he said. And Hamer pointed out that tariffs are not paid by the foreign country or even the foreign company that is exporting the goods, but are added on to the costs for customers here.
Hamer said there will be specific impacts on Arizonans − and not just in making avocados more expensive.
He specifically cited disruption of the supply chain for the state’s nascent auto manufacturing industry. And that, said Hamer, exists largely because of the supply chain that exists with companies in Sonora.
One example is Lucid Motors which is planning to build electric cars in Pinal County, with the parts built in Mexico and shipped to Arizona for final construction. A huge tariff, said Hamer, “could put those investments at risk.”
It’s not just Lucid, he said, with other cross-border enterprises working on things like self-driving trucks.
Hamer predicts other economic fallout for Arizona.
He said there are about 300,000 jobs in the state − close to 10 percent of the economy − that are linked to tourism, with Mexican visitors spending $7.5 million a day in Arizona. And Hamer said that for many border area communities more than half their sales taxes can be linked to cross-border visitors.
Hamer said it’s already difficult for Mexican visitors to get into this country.
“I would suspect that if our friends from Mexico feel that this is an unfairly targeted tariff they may be less likely to visit the United States,” he said.
The president, however, does not see the tariffs as potentially harming the U.S. economy.
“The sustained imposition of Tariffs will produce a massive return of jobs back to American cities and towns,” his statement reads.
Hamer did not dispute the concerns of the White House which has seen an unprecedented flood of immigrants, particularly from Central America, arriving at the U.S. border. Immigration officials say they expect to have to deal with close to a million people along the southern border this year, double the figures from last year.
Adding to that are legal restrictions that keep immigration officials from keeping people in custody until they can get a hearing on their asylum claims, forcing their release into communities and potentially sending the message that those who can get here will remain free, potentially for years.
But Hamer said lashing out at Mexico — and doing so in a way that could hurt the Arizona economy − is not the right answer.
“It’s not Mexico’s fault that we don’t have enough immigration judges,” he said. “It’s not Mexico’s fault that we have refugee laws that are in need of updating.”
Trump, however, does not see it that way, accusing Mexico of “passive cooperation” with those coming up through that country’s southern borders.
“Mexico has very strong immigration laws and could easily halt the illegal flow of migrants, including by returning them to their home countries,” the president wrote. “Additionally, Mexico could quickly and easily stop illegal aliens from coming through its southern border with Guatemala.”
On a broader basis, Hamer questioned the wisdom, and the effect on the stock market, of Trump picking this fight.
“We’re in the middle of severe trade turmoil with the second-largest economy in the world, China,” he said.
“And the administration moves forward with what seems like an arbitrary tariff against one of America’s closest friends and one of our top export markets,” he continued. “It just doesn’t make much sense.”
The administration is moving on other fronts to cut the flow, but from the other end of the pipeline.
In an interview earlier this week with ABC, Kevin McAleenan said he was visiting Guatemala to work with that country’s security forces in a bid to break up the smuggling networks that are charging people more than $6,000 to reach the United States. McAleenan called Guatemala the “epicenter” of the migration problem, with 40 percent of those arriving at the U.S. border coming from there.