Stocks plummet after President Trump announces new tariffs will be imposed on all Mexican goods

Trump says the new tariffs will increase monthly “until Mexico substantially stops the illegal inflow of aliens"

By Nicole Karlis

Senior Writer

Published May 31, 2019 12:43PM (EDT)

 (Getty/Chip Somodevilla)
(Getty/Chip Somodevilla)

President Donald Trump announced Thursday evening that his administration intends to impose a 5 percent tariff on all Mexican goods, beginning in June.

According to the president, the tariffs will increase monthly “until Mexico substantially stops the illegal inflow of aliens coming through its territory." That means the tariffs, which are said to take effect on June 10, could rise as high as 25 percent by October if his demands are not met.

Mexican President Andrés Manuel López Obrador said in a letter to Trump made public Thursday that he was sending his foreign minister to Washington the next day.

"Social problems are not resolved with taxes or coercive measures," López Obrador said in regards to new tariffs. "With all due respect, although it has the sovereign right to express it, the motto 'America First' is a fallacy."

This is not the first time Trump has threatened tariffs in an attempt to stop undocumented migrants from crossing the southern border. In April 2018, the president tweeted that Mexico must "stop the big drug and people flows, or I will stop their cash cow, NAFTA. NEED WALL!"

White House press secretary Sarah Huckabee Sanders blamed the tariffs on Democrats during an appearance on Fox News.

“We saw Robert Mueller this week closing up his shop, completed his investigation and moving on,” Sanders told the conservative news channel. “If Democrats would quit wasting so much of their time attacking this president, the president wouldn’t have to engage Mexico in the same way because Congress would be doing its job. At some point, they have to get serious about solving real problems  — and so far they continue to be unwilling to do that.”

Sanders added: “Democrats have got to stop obsessing over something that never happened — and start engaging with the president to fix some of the real problems that are happening right in front of their faces like the problem at the border,”

On Thursday, the Trump administration also attempted to move its plan for a revamped NAFTA, the North American Free Trade Agreement, forward. The move drew a quick rebuttal from Speaker of the House Nancy Pelosi, D-Calif., who had warned the White House not to send Congress a draft approval yet, as Democrats seek changes to key parts of the agreement.

"The Trump administration's decision to send Congress a draft statement of administrative action before we have finished working with U.S. trade representative Lighthizer to ensure the USMCA benefits American workers and farmers is not a positive step," Pelosi said in a statement. "It indicates a lack of knowledge on the part of the administration on the policy and process to pass a trade agreement."

The impact of straightforward tariff on all Mexican goods would be felt on the wallets of American consumers. According to the New York Times, Mexico sent the U.S. $346.5 billion in goods in 2017. Thus, a 5 percent tariff would amount to a tax increase of more than $17 billion.

Markets wavered in response to Trump’s announcement Friday, with the Dow tumbling more than 300 points in early trading. The Mexican peso experienced its biggest decline in the last seven months, also.

By Nicole Karlis

Nicole Karlis is a senior writer at Salon, specializing in health and science. Tweet her @nicolekarlis.

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