USMCA may be derailed by new tariff threat to Mexico

Imports and Exports | 3 June 2019

The likelihood of Mexico agreeing to a free trade deal with the US may have been significantly reduced.


Any imminent signing of the United States-Mexico-Canada Agreement (USMCA) may have been derailed after US president Donald Trump threatened to apply fresh tariffs on all imported goods from Mexico.

Writing in a tweet, Mr Trump said a five per cent tariff will come into effect on June 10th 2019 unless Mexico does more to combat illegal immigration into America.

A White House statement said the levy would rise to ten per cent on July 10th if no "effective actions" took place and would continue to increase to a height of 25 per cent by October, where they would then remain.

Mr Trump said the Emergency Economic Powers Act would be invoked to allow him to carry out this threat.

However, critics have warned the move could put the USMCA - a revision of the North American Free Trade Agreement - in serious jeopardy and also significantly impact American consumers.

Indeed, almost 14 per cent of all US imports came from Mexico in 2018, with the country being a primary source of fresh produce in particular.

Writing in response to Mr Trump's tweets, Mexican president Andres Manuel Lopez Obrador said: "Social problems are not solved with duties or coercive measures."