Update –> In a tweet on June 7th by President Trump, the trade world was notified that the immediate threat of tariffs was officially off the table… for now.
As a result of the immigration crisis intensifying at the border of the United States and Mexico, President Trump announced a five (5) percent tariff to be levied on all goods from Mexico starting June 10th. The tariffs are set to continue to increase by five percent each month up to twenty-five percent. The tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.
The effective date of the imposition of the additional tariffs are as follows:
- 10% on July 1;
- 15% on August 1;
- 20% on September 1;
- 25% on October 1.
On February 15, 2019, President Trump issued a declaration of a National Emergency arguing that “the current situation at the southern border presents a border security and humanitarian crisis that threatens core national security interests and constitutes a national emergency.” President Trump stated his authority to impose the additional tariff is pursuant to the International Emergency Economic Powers Act (IEEPA) of 1977. IEEPA grants unilateral presidential power to regulate the economy in response to any unusual and extraordinary threats to the US. President Trump invoked his legal right to regulate the economy in the White House statement, dated May 30, 2019, when it asserted that “Mexico’s passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States.”
According to Secretary of Homeland Security, Kevin McAleenan, the number of illegal immigrants crossing our border has increased significantly over the past few months. In fact, McAleenan states that “[t]he month of May is on pace to be the highest month in crossings in over 12 years and will significantly surpass the record 109,000 in April….”
While IEEPA undoubtedly vests the authority to regulate aspects of the economy, section 1702, which prescribes which actions may be taken by the President, is silent as to whether the imposition of additional tariffs is permitted. The White House Counsel has yet to explain its full legal rationale, and many expect this decision to be challenged in courts.
Not only is the scope of authority and the imposition of additional tariffs questionable, but questions also remain regarding the US compliance with World Trade Organization regulations, as well as whether the imposition of tariffs is authorized under NAFTA (or the still in negotiation) United States-Mexico-Canada Agreement (USMCA). The purpose of the USMCA (the “NAFTA 2.0”) is to align the trade agreement with the current trade environment.
Vice President Pence recently stated, “Congress should pass USMCA this summer”. With negotiations still underway, the threat of these additional tariffs also threatens the timeline for USMCA.
Mexican President, Andres Manuel Lopez Obrador, replied to President Trump’s tweet with his own and had separately directed the Mexican Senate on Thursday to set up sessions regarding the USMCA, in order to ratify the agreement in an expedient fashion. However, these recent tariff developments may stymie discussions.
Considering that the costs of tariffs fall on the importers and that the importer typically then passes that cost onto the consumer, many claim that these tariffs will only harm consumers in the US. However, White House spokesperson Hogan Gidley articulates, “Illegal immigration comes at a cost. The American taxpayer is paying for what’s going on at the border.”
With Democratic representatives refusing to fund the Wall, the White House has reverted to other means of securing our nation’s border, one of the fundamental obligations as President. Prior to the tariff announcement, President Trump released a video of the largest apprehension of illegal immigrants inside of the United States:
Diaz Trade Law will be monitoring the ongoing trade war, and keeping our readers updated. Our Customs and International Law attorneys are available at 305-456-3830 or email@example.com.