President Donald Trump announced on Twitter that he is placing a 5% tariff on all Mexican imports

President Donald Trump announced on Twitter that he is placing a 5% tariff on all Mexican imports

President Donald Trump announced on Twitter that he is placing a 5% tariff on all Mexican imports, effective June 10, to pressure the country to do more to crack down on the surge of migrants trying to cross the U.S. border.

He said the percentage will gradually increase — up to 25% — “until the Illegal Immigration problem is remedied.”

The decision showed the administration going to new lengths, and looking for new levers, to pressure Mexico to take action — even if those risk upending other policy priorities, like the United States-Mexico-Canada Agreement, a trade deal that is the cornerstone of Trump’s legislative agenda and seen as beneficial to his reelection effort. It also risks further damaging the already strained relationship between the U.S. and Mexico, two countries whose economics are deeply intertwined.

Trump made the announcement by tweet after telling reporters earlier Thursday that he was planning “a major statement” that would be his “biggest” so far on the border.

But how can Trump do that?

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The tariffs will begin at 5% and increase to 25% in the coming months unless Trump sees the results he wants, the White House said. But what they are, exactly, White House officials couldn’t explain. If they go into effect, they will impose harsh economic penalties on Americans who buy goods from Mexico. Which is probably every American.

One key thing to know is that the emergency powers he is using evolved from the need for the President to act with decisive authority during war, specifically World War I. The Great Depression prompted the expansion of emergency powers to include economic emergencies, according to an analysis by the Congressional Research Service. (This piece uses many facts from that analysis, which is worth reading.)

These powers were used throughout the Cold War until the 1970s, when, according to CRS, Congress basically realised the US had been in a state of emergency for 40 years and put new restrictions on the President, including requirements to track the cost of any emergency and justify it each year.

The law by which Trump can impose sanctions like the tariffs, passed in the wake of Watergate and Vietnam, is the 1977 International Emergency Economic Powers Act. This authority has actually been used quite frequently; there have been 54 national emergencies, 29 of which are ongoing.

Some of these emergencies targeting countries have been going on for decades, like sanctions on Iran. Others, like the one enacted by Bill Clinton targeting narcotics traffickers, have certainly affected people in Mexico, but just as certainly not affected the whole country.

The law has never, before now, been used to impose tariffs, according to CRS. And Mexico is a neighbour and ally, from which we bought $345 billion in stuff last year because we are joined together in the North American Free Trade Agreement.

That’s an incredibly broad application, especially considering those costs will ultimately be passed along to American consumers, who ultimately bear the brunt of tariffs — which are paid by importers, not by exporting countries.

They’ll affect the supply chain for the US auto industry, machinery, medical instruments, not to mention the avocados and tomatoes in American salads, fruit, vegetables. All of it.

And it’s a two-way street. Americans sold just shy of $300 billion in goods to Mexico in 2018 — cars, machinery, pork and beef. Billions and billions dollars worth of many different type of goods that might be subject to retaliatory tariffs from Mexico.

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