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MEXICO STILL FACES A TARIFF THREAT FROM THE US
The threat of US tariffs on Mexico is still present and will have implications for Mexico’s key issue, as well as efforts to strengthen the power of the government.
The Stratfor website posted an article stating that Mexico’s agreement to increase efforts to prevent the influx of immigrants from Central America from deflecting the White House risk imposes a tax of up to 25% on the country’s exports.
However, the uncertainty surrounding the plan to punish Mexico for not fulfilling its commitments under the agreement to please US President Donald Trump continues to exist.
Agreement details of 7 June 2019 with the Mexican Government to limit illegal migration to the north across the Mexican-Guatemalan border, including the commitment of the Mexican Government to regulate 6,000 soldiers of the National Guard to the border to strengthen security in this area..
A separate unconfirmed report confirms that the US will lead an effort to reform refugee laws in Mexico as well as between Central American countries to bring migrants back to the first country they arrived on the journey to the north. In fact, this policy will force Mexico and Guatemala to be responsible for tens of thousands of foreigners.
The number of migrants – especially from Central America – through Mexico to the US has increased significantly in the last 18 months. In May 2019, more than 100,000 people were arrested by US authorities at the border with Mexico, the largest number in a month in nearly a decade.
The negotiations that led to the announcement of the agreement seem to have made it clear that the White House will only assume that Mexico complies strictly with the agreement if the number of arrests of cross-border migrants to US-Mexico drops to 20,000 cases per month, the number last recorded around the time Mr. Trump took office in 2017. In the past decade, the number of illegal immigrants has always been much greater.
Although Mexico may be able to send more troops to the border to strengthen security in this area, they instead use the National Guard – a security force consisting of soldiers under the command of the Secretary of Home Affairs. That is probably because the use of military forces to capture and banish Central Americans will face domestic criticism and face legal challenges..
If the White House thinks Mexico does not meet US requirements, it will continue to threaten to impose taxes in the near future. Recurring negotiations on the tax rate that the US can impose on Mexico not only make businesses and their supply chains on both sides of the border unstable, it also makes the political future of Mexico’s leadership obscure.
The United States has made it clear to the Mexican Government that it expects to see the results of settling migration within 90 days. Meanwhile, Mexican Foreign Minister Marcelo Ebrard said the US only gave Mexico a 45-day deadline to produce results. In any case, the pressure of time means that the problem of tariffs may soon reappear.
During this process, the United States will choose Mexican tariff sanctions at any time. And even if the two sides finally reached an agreement to completely eliminate the risk of tax imposition, the uncertainty caused by this situation would have a terrible impact on some investment projects in Mexico.
Companies with deep supply chains that extend deep inside Mexican territory create products for the US market will be cautious about pouring more money into a country whose goods may soon become a much larger target.
