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Jun. 3, 2019

Tariff Insider: June 3, 2019

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U.S. Announces Tariffs on Mexico Imports while China Implements Reactionary Tariffs on Goods from the U.S.

U.S. Prepares to Implement Tariffs on Mexico Imports

June 12, 2019 update: Tariffs on Mexico goods have been "indefinitely suspended."

Wrapping up a tumultuous few weeks of tariffs on China, the Trump administration has warned that a 5% tariff would be imposed on goods imported from Mexico, effective June 10th. The tariff was announced on the evening of May 30th in an effort to push Mexico to address immigration issues. With that announcement came a heads up from the White House that if Mexico “should choose not to cooperate on reducing unlawful migration,” tariffs will be increased as follows:

  • 10% on July 1st, 2019
  • 15% on August 1st, 2019
  • 20% on September 1st, 2019
  • 25% on October 1st, 2019

If the tariff reaches 25%, it would then remain at 25% until Mexico “substantially stops the illegal flow of aliens coming in through its territory,” according to an official statement from the White House.

President Trump implemented the tariff under the International Emergency Economic Powers Act of 1977, which gives the President “the authority to regulate a variety of economic transactions following the declaration of a national emergency.” It has been used in the past to restrict exports, limit foreign investment in U.S. companies and impose tariffs on imports into the U.S.

According to Bloomberg, the tariff on Mexican imports is expected to have a larger impact on American consumers than the Chinese import tariffs, because “price increases for items like food are more directly observable.”

Meanwhile, China Implements Tariffs on U.S. Imports

In response to the U.S. tariff hikes on Chinese imports, China has raised tariffs for thousands of items imported from the U.S. Originally announced on May 13th, these tariffs will apply an additional 20% or 25% on more than 50% of the U.S. products targeted.

We’ll continue to monitor the tariff situations in both Mexico and China and provide updates in the Tariff Insider.

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