Posted on June 07, 2019
On May 30, 2019 President Donald Trump issued a statement declaring that there will be a 5% Tariff on all goods imported from Mexico, starting June 10, 2019. The president has stated that if the immigration crisis persists and the Mexican government does not act to limit the amount of nondocumented immigrants entering the USA then he will raise the tariff to 10 % on July 1, 2019. The tariff is set to increase to 15% on August 1, 2019 then to 20% on September 1, 2019, and to 25% on October 1, 2019. After October 1st the tariff will stay at 25%. (White House Press, 2019)
How might this affect the entry process into the US?
As seen with the Section 232 on steel products from Canada and Mexico and Section 301 tariffs on Chinese products, operationally it is likely that customs will require a secondary HTS Code upon US customs declaration.
How will this affect the American market?
According to the Office of the United States Trade Representatives, Mexico was the U.S.'s second largest supplier of goods in 2018 with a recorded $371.9 billion dollars’ worth of goods crossing North into the U.S. Vehicles and agricultural products were among the top imports in 2018. The leading services imports from Mexico to the U.S. were in the travel, transport, and technical and other services sectors (Writers of the United States Trade Representative.).
Several automaker stocks dropped Friday morning after news of the tariffs spread, it is likely the auto market will be severely impacted by the tariffs both from a US perspective and certainly if retaliatory tariffs are imposed on US goods imported into Mexico.
Further, the proposed tariffs will also likely have a major effect on negotiations surrounding the United States Mexico-Canada Agreement (USMCA). Sen. Chuck Grassley, R-Iowa has been a major opponent of the tariffs that trump has suggested even writing an op-ed in the Wall Street Journal about his opposition. "following through on this threat would seriously jeopardize passage of USMCA. Trump’s Tariffs End or His Trade Deal Dies. There is no appetite in Congress to debate USMCA with these tariffs in place.” (Grassley, 2019)
At the present moment, negotiations are still occurring between the US and Mexican Trade Representatives. Allyn will continue to monitor negotiations over the weekend and consultants are available to discuss potential and realized impact on corporate supply chains. For more information, please visit us at www.allynintl.com or email us firstname.lastname@example.org.
Contributor: Jonathan Heiland
About Allyn International
Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China and Prague, Czech Republic. For more information, visit www.allynintl.com.
Daniels, J. (2019, June 3). Trump tariffs on Mexican goods could cost Texas and California thousands of jobs, a new study says. Retrieved June 4, 2019, from www.cnbc.com: https://www.cnbc.com/2019/06/03/trump-tariffs-on-mexico-could-cost-us-more-than-400000-jobs-study.html
Grassley, C. (2019, April 28). Trump’s Tariffs End or His Trade Deal Dies. Retrieved from Wall Street Journal Website: https://www.supplychaindive.com/news/us-mexico-tariffs-all-imports/555893/
White House Press. (2019, May 30). Statement from the President Regarding Emergency Measures to Address the Border Crisis. Retrieved from The White House: https://www.whitehouse.gov/briefings-statements/statement-president-regarding-emergency-measures-address-border-crisis/
Writers of the United States Trade Representative. (n.d.). U.S.-Mexico Trade Facts. Retrieved June 4, 2019, from Office of the United States Trade Representative.: https://ustr.gov/countries-regions/americas/mexico#