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Mexico won't panic over Trump trade threats, president says

Proposed rising tariff criticised by business groups and politicians

Peter Stubley
Saturday 01 June 2019 14:38 BST
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Donald Trump talks of 'ridiculous' immigration laws ahead of announcing Mexico tariffs

Mexico‘s president has said his country will not panic over Donald Trump’s threat to impose punitive tariffs in a row over migrants crossing the US border.

Andrés Manuel López Obrador urged “great prudence” as he sent his top diplomat to Washington for talks to head off the 5 per cent tax on Mexican goods scheduled for 10 June.

“I tell all Mexicans to have faith, we will overcome this attitude of the US government, they will make rectifications because the Mexican people don’t deserve to be treated in the way being attempted,” he said.

Mr Trump has claimed that the tariff will increase by another five per cent every month up to 25 per cent “unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory”.

He said that the tarriffs were “about stopping drugs as well as illegals”.

However, Mr Lopez Obrador said Mexico was already carrying out its responsibility in regards to immigration policy. Last month authorities arrested hundreds of people travelling in a migrant caravan through the southern state of Chiapas.

“We have to help so that they don’t enter the United States illegally, but we also have to do it respecting human rights,” the president said. ”Nothing authoritarian. They’re human beings.”

Mr Lopez Obrador rejected suggestions that Mexico should complain to an international trade body. ”We want to have a good relationship with the United States government,” he said.

His comments came after he sent a letter to Mr Trump saying he did not want a confrontation.

“The peoples and nations that we represent deserve that, in the face of any conflict in our relationships, no matter how serious, we will resort to dialogue and act with prudence and responsibility,” he said.

Mr Lopez Obrado said that the “America First” slogan was a “fallacy” because “until the end of time, universal justice and fraternity prevail over national borders”.

The threat of US tariffs on Mexico has sparked an outcry from business groups and political figures.

Republicans said tarriffs jeopardised the new North American trade agreement, which was negotiated last year but has not yet been approved by lawmakers.

“Let’s focus on solving the crisis at the border but not hurt our economy and endanger an important POTUS goal – a better trade deal w/ Canada & Mexico,” said Ohio senator Rob Portman.

Senator Chuck Grassley of Iowa, the chairman of the senate finance committee, said the president’s threat was a misuse of presidential authority.

“Imposing tariffs on goods from Mexico is exactly the wrong move,” said Neil Bradley, executive vice president of the US Chamber of Commerce. “These tariffs will be paid by American families and businesses without doing a thing to solve the very real problems at the border. Instead, Congress and the president need to work together to address the serious problems at the border.”

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“It’s very hard to see the USMCA going forward after this,” said Philip Levy, who was a White House economist under president George W Bush and is now a senior fellow at the Chicago Council on Global Affairs. “The president has essentially told the Mexicans that the deal offers them no guarantees against trade protectionism. It asks them to jump through hoops with no reward.”

Stock markets plunged on Friday, with the Dow Jones industrial average losing around 355 points, or 1.4 per cent, after the news of Mr Trump’s threat broke.

Economists forecast that tariffs of 25 per cent would cut US growth by at least 0.7 per cent to around 1 per cent in 2020. Meanwhile, Mexico could slide into recession.

If Mexico retaliates with its own tariffs they could also damage the US auto and farm industries. Last year Mexico bought $300bn of US goods and services, while the US imported $378bn from Mexico.

The US is already involved in a trade war with China following the president’s decision to impose 25 per cent tariffs on $250bn of imports.

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