Tariff war with Mexico averted

Jun 9, 2019  | 3 min  | Ep4442

Another tariff tiff was avoided Friday.

The United States and Mexico issued a statement  of agreement Friday night that suspended threatened tariffs between the two countries.

Marcelo Ebrard, Mexican Foreign Secretary: (Spanish translation) “Taking into account the significant number of migrants in the US coming from Central America through Mexico, both countries recognized the vital importance of rapidly resolving the humanitarian emergency and security situation. The governments of the United States and Mexico will work together as soon as possible to immediately implement a durable solution.” 

The agreement allowed for victory laps on both sides of the border.

President Trump tweeted: “I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended.”

Andrés Manuel López Obrador, Mexican President: (Spanish translation) "We celebrate the important agreement of yesterday because it was a very difficult situation, very awkward doing the same and applying tariffs to some products of the US, the same measures, commercial restrictions similar to the ones that would be imposed on Mexican exports."

The joint statement was short on specifics, and critics argued that the pledges of more Mexican troops on the Guatemalan border and expanding the detention of asylum seekers in Mexico had been promised in previous negotiations over the last six months.

The suspension of threatened tariffs avoided what many feared would be a costly economic war with the United States’ largest trading partner. A tariff of 5 percent on all imported goods would have taken effect on Monday. Mexico exports $418 billion worth of goods annually and the U.S. imports 80 percent of the total.

Automobiles, trucks and their respective parts are the lion’s share of Mexico’s export volume to the United States. Supply chains have grown more complex since the signing of NAFTA in 1994, and vehicle components cross the border up to 8 times before final assembly. Multiple tariffs charged on multiple crossings would inflate the costs of autos paid by the American consumer.

The prospect of another tariff war drew a cool reception from Republicans in Washington.

Senator Mitch McConnell, Majority leader, Republican – Kentucky: “We are not fans of tariffs. We're still hoping that this can be avoided, at the same time, it's way past time the president's request for assistance from our government be met.” 

Senator Charles Grassley, R – Iowa : “These talks will probably come to a resolution so that tariffs aren’t needed. And so I don’t think we need to deal with what the GOP in the United States Senate says. Now I have said that I didn’t agree with what the President on these tariffs. I’m not backing off on that. I don’t think it’s the right thing to do.”

Negotiations on immigration between the two countries will continue.

For Market to Market, I’m Peter Tubbs.

 

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