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Mexico averts Donald Trump’s tariffs on its exports to US

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The US and Mexico have reached a deal to curb migration, defusing Donald Trump’s threat to impose sweeping tariffs on Mexican imports after several days of tense negotiating sessions in Washington.

“I am pleased to inform you that the United States of America has reached a signed agreement with Mexico. The tariffs scheduled to be implemented by the US on Monday, against Mexico, are hereby indefinitely suspended,” Mr Trump said in a tweet on Friday night, after returning to the White House from his trip to Europe.

The US president added that Mexico had agreed to take “strong measures” to “greatly reduce, or eliminate, illegal immigration” coming across America’s southern border.

The agreement was greeted with relief in Mexico, which now has three months to appease Mr Trump.

The deal caps an eight-day saga that began when Mr Trump abruptly announced he was moving to slap tariffs on all Mexican goods from June 10. The levies would begin at 5 per cent, then ratchet up over the summer to hit a peak of 25 per cent in October.

In addition to the trade war with China, the threat of higher tariffs on goods from Mexico, whose economy is deeply integrated with the US, had caused further unease in financial markets, contributed to fears about a US economic slowdown, and accelerated talk that the Federal Reserve might be forced to cut interest rates as its next move.

Mr Trump had faced a strong backlash to the possible tariffs from a vast swath of corporate America which feared a dramatic disruption in its business, and fury among many lawmakers on Capitol Hill, including the president’s own Republican party. This raised pressure on the White House to reach a deal.

But Mexico faced pressure of its own to avoid the levies, quickly dispatching a negotiating team led by Marcelo Ebrard, the foreign minister, to Washington to resolve the crisis. “There will not be US tariffs from Monday. Thank you to everyone who has supported us demonstrating how great Mexico is,” Mr Ebrard wrote on Twitter.

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Marco Rubio, the Republican senator from Florida, cheered the agreement. “By exerting maximum pressure and demanding decisive action from the López Obrador administration [in Mexico], President Trump has secured an important victory on behalf of the American people,” he said.

But Chuck Schumer, the Democratic Senate leader from New York, mocked the agreement. “Now that that [immigration] problem is solved, I’m sure we won’t be hearing any more about it in the future,” he wrote on Twitter.

Analysts warned that some lasting damage had been done to the relationship between the US and Mexico during the stand-off, and Mr Trump’s threat risked resurfacing at any time. Duncan Wood, head of the Mexico Institute at the Wilson Center, a think-tank in Washington, tweeted: “So a deal has been reached. Mexico can breathe a huge sigh of relief. Catastrophe has been averted for now. But the problem has not disappeared — it’s like the Sword of Damocles hanging over Mexico’s head.”

Trump administration officials will hope that the end of the stand-off will put Congress back on the path towards ratification of US-Mexico-Canada Agreement, the deal to revise Nafta agreed with Ottawa and Mexico City last year. That process was gaining momentum on Capitol Hill but was stopped in its tracks after Mr Trump’s announcement of tariffs on Mexican imports.

Mr Trump’s tariff threat against Mexico was not driven, however, by trade, but rather by immigration and the US president’s need to show that he was taking action to stop new arrivals after promising to rein in migration during the 2016 election campaign and failing to secure funding from Congress to construct a wall at the border.

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Among the most enthusiastic supporters of the hardline strategy within the Trump administration was Peter Navarro, the White House manufacturing policy adviser. Robert Lighthizer, the US trade representative, and Steven Mnuchin, the Treasury secretary, who have been leading the trade talks with China, were much less involved or vocal, to the point that officials had to deny reports they had opposed the policy.

Mr Ebrard said a cornerstone of the latest agreement was Mexico’s decision to deploy its newly created National Guard police force to 11 towns along its southern border from Monday. The National Guard is being created out of the existing federal police, military police and other forces and is not yet active; a government spokeswoman had said earlier it was not expected to be up and running until the end of the month.

Earlier in the week Mexico had agreed to send 6,000 troops to its southern border with Guatemala to stop the migration flow from that end, since the recent surge in new arrivals to the US come from Central America. But that move was not sufficient to meet demands from the US for Mexico to make a concession on asylum rules that would allow America to push back people seeking refugee status, and have them await their claims on Mexican soil.

Now the controversial so-called Remain in Mexico programme, whereby asylum seekers are returned to Mexico to await their hearing in a US asylum court, will be rolled out to more places along the US border from the three where it has been so far in force. Mexico will provide those asylum seekers with job opportunities, health and education, Mr Ebrard said.

Current backlogs in US asylum courts mean the wait could last years. Currently Mexico has accepted the return of 8,835 asylum seekers to await their court hearing in Mexico, and because of US metering at the border, 18,778 migrants are still waiting in Mexico to begin their asylum claims with US authorities.

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Asked how many asylum-seekers Mexico could accommodate under the plan, Mr Ebrard said precise numbers would depend on the effectiveness of his country stepping up policing of its southern border and requiring migrants to register with Mexican authorities.

The deal contained no reference to any kind of third safe country agreement, which the US had been pushing for, under which migrants would have to seek refuge in Mexico rather than the US. Mexico dug in its heels on the issue, which has long been a red line for the government.

One idea, pushed by Washington, had been for Guatemalans to be returned to Mexico, the first country they crossed into, and Salvadorans and Hondurans to be deported to be Guatemala. But Mr Ebrard said: “This is an idea that the administration presented but it is not in this accord.”

The agreement did include the US acceptance of a need to work together for development in Honduras, Guatemala and El Salvador, which Mexican president Andrés Manuel López Obrador has described as a social and “humanitarian crisis” affecting his country’s “Central American brothers”.

Mexico will step up enforcement of its migration laws and cannot allow people to transit the country without being registered with the authorities, Mr Ebrard said.

Mr Ebrard said that under the agreement, if the measures adopted did not deliver the desired results, the two sides would have to announce within three months what they planned to do.

Mr López Obrador was due to hold a “friendship rally” in the border city of Tijuana on Saturday evening.

Additional reporting by Michael Stott in Washington





Via Financial Times

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