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Mexican officials race to neutralise Trump’s tariff threat

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Mexican officials in Washington for talks to avoid crippling bilateral trade tariffs triggered by Donald Trump’s demands to curb illegal migration have signalled their eagerness for a resolution while stressing they would not accept a deal forcing migrants to apply for asylum in their country instead of the US.

“We have said for a while that a third safe country [mechanism] is not going to be acceptable for Mexico,” Marcelo Ebrard, foreign minister, told a news conference at the Mexican embassy. “They haven’t suggested that yet, but it would not be acceptable.”

Mr Ebrard said the task of “convincing, conversing, persuading” lay ahead. Mr Ebrard said he will meet on Wednesday with his US counterpart, Mike Pompeo, and the two countries’ agriculture ministers will meet on Monday.

Mexico’s president, Andrés Manuel López Obrador, continued to strike an optimistic tone in his news conference on Monday morning, saying he thought “dialogue, dialogue and more dialogue” would lead to a deal.

He stressed he wanted to preserve good relations, saying in a note sent to Washington on Sunday: “The Government of Mexico is a friend of the Government of the United States of America. The president of Mexico wants to continue to be a friend of President Donald Trump. But above all, we Mexicans are friends of the people of the United States.”

Just two weeks earlier, obstacles to free trade between the US and Mexico, which in the first quarter of 2019 overtook China as America’s biggest trading partner, began to fall when Washington removed tariffs on steel and aluminium that had prompted retaliation from Mexico. The agreement also seemed set to smooth the path for passage of a new Nafta trade agreement linking the three North American economies.

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But Mr Trump last week vowed to slap 5 per cent tariffs on all Mexican exports starting on June 10, rising to 25 per cent by October unless Mexico did more to curb migrant flows.

Mexico counters that it is already doing a great deal. Officials said 80,537 migrants were expelled from December to May, and Mexico had received 24,451 asylum requests in the first five months of this year. “If current trends continue, that number may reach more than 60,000 by the end of 2019,” the government said in a statement.

Under a controversial policy dubbed “Remain in Mexico”, the US has returned 8,835 migrants seeking asylum in the US to Mexico to wait for their US immigration court appointments on Mexican soil. In addition, 18,778 would-be asylum seekers are waiting in Mexico to present their claims at a US border point of entry, the government added.

Mexico says it has tightened control of immigrants both at its southern border and in the Isthmus of Tehuantepec, to try to slow the flow of migrants heading north. “Without Mexico’s efforts, an additional quarter million migrants would arrive at the US border in 2019,” the government said on Monday.

However, Mexico’s approach to immigration is fundamentally at odds with that of Mr Trump. Mr López Obrador wants US investment in the Northern Triangle countries of Central America — Guatemala, Honduras and El Salvador, which are the largest source of illegal immigrants into the US — to improve conditions so that people struggling with poverty and brutal gang wars do not need to migrate north.

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Mr Ebrard admitted that there was not yet “a single project in place”.

“We don’t think it is necessary to apply tariffs. It’s very expensive for the US, it’s very expensive for Mexico, and it will reduce the competitiveness of both countries,” he said. “If there are only punitive actions, this is not going to work.”

Nonetheless, Graciela Márquez, the economy minister, said Mexico was analysing how to respond strategically if tariffs are applied next week, although she said the country would not want to damage supply chains or job creation.

The Mexican government believes that a 5 per cent tariff would cost US consumers $17bn a year. If tariffs reached the full 25 per cent that Mr Trump has threatened, the cost to Americans would be $100bn, it said. That could mean cars assembled in Mexico — the Ford Fusion, Nissan Sentra or Dodge Ram, for example — would cost $1,500 more by the summer and $7,500 by the autumn.

The impact on Mexico’s already slowing economy could also be devastating, tipping it headlong into stagflation and possible recession, say economists. Agriculture is a key Mexican export to the US and a 5 per cent tariff on agricultural goods would cost Mexico $1.34bn a year, or $3.7m a day, rising to $6.7bn if a full 25 per cent tariff were applied, the government said.

Mexico remained upbeat about the prospect of achieving a deal. “We have faith in dialogue and politics as a means to avoid a costly and unnecessary confrontation,” said Martha Bárcena, Mexico’s ambassador to the US. But she added: “There is a clear limit to what we can negotiate and that is our Mexican dignity.”

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Via Financial Times

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