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  HOME | Mexico

Mexico Avoids Tariffs for Now, but the Threat Lingers

MEXICO CITY – The deal the United States and Mexico struck to prevent the US from imposing tariffs largely reaffirms the countries’ commitments to existing measures on immigration, but will allow Washington to keep up pressure on Mexico.

The deal reached late Friday included a provision that former diplomats and analysts said reinforces the idea that the US will continue to use tariffs as leverage: The US will review the effectiveness of Mexico’s immigration policies after 90 days.

“Unless we really solve the immigration issue in a way that’s intelligent and that respects human rights, the threat of tariffs will always be present, as long as President Trump is in office,” said Geronimo Gutierrez, who served as Mexico’s ambassador to the US for the last two years of the administration of former Mexican President Enrique Peña Nieto.

Under Friday’s deal, Mexico agreed to increase enforcement to curb migration from Central America. Mexican officials had spent much of the week in Washington talking about the steps already taken at Mexico’s southern border with Guatemala, including plans to deploy 6,000 troops from its newly established National Guard.

Mexico also agreed to the rapid expansion of a policy to return Central American asylum seekers to Mexico while they wait for US immigration court hearings. However, the US had previously said it planned to implement that program across the entire border.

The policy is an alternative to the status quo, which President Trump has long derided as “catch and release,” under which migrants are allowed to stay in the US for months or even years while they await a court date.

Since January, the US has been returning migrants to border cities, including Tijuana, Mexico, and El Paso, Texas, under the Migrant Protection Protocols program agreed to by both countries. The Mexican government said on Monday that the country has accepted more than 8,000 migrants under the program.

But, thwarted by logistical challenges and briefly halted by a federal court, the program’s implementation has been slow. Immigrant advocates have argued that Mexico isn’t a safe destination for Central American asylum seekers, and that some have been targeted there by kidnapping rings.

“The administration is gambling that [the policy] doesn’t run into further legal troubles in the United States,” said Sarah Pierce of the Washington-based Migration Policy Institute.

The US pressed Mexico during negotiations this week to accept a version of a designation as a “safe third country” capable of accepting all asylum applicants, but Mexican officials resisted, according to a person familiar with matter.

The agreement also reaffirmed an earlier deal between the US and Mexico to support economic-development efforts in Central America, which Mexican officials had been pointing to all week as key to addressing the root causes of the flow of migrants from Guatemala, Honduras and El Salvador – chiefly, poverty, food insecurity and widespread criminal violence.

In December, the US committed $5.8 billion through public and private investment in Guatemala, Honduras and El Salvador as a part of the proposed plan and $4.8 billion to strengthen security and fortify the economy of southern Mexico.

Only a small portion of the funds committed represented new investments. The US State Department said it plans to allocate $180 million to Central America in the 2019 fiscal year and could invest and mobilize private-sector loans for $2.5 billion if commercially viable projects are identified. The rest of the money was already in the pipeline.

In Mexico’s south, which includes some of the country’s poorest states, like Chiapas, Oaxaca and Guerrero, the US commitment could consist of $2 billion in new, potential loan guarantees from the US Overseas Private Investment Corp. and an additional $2.8 billion that was already in OPIC’s pipeline.

While officials from both sides had said the talks were focused on migration issues, Trump said on Saturday that “Mexico has agreed to immediately begin buying large quantities of agricultural product” from the US The joint declaration between the US and Mexico released on Friday, however, included no reference to agriculture or trade provisions in the deal.

The US Agriculture Department didn’t immediately respond to requests for information about any trade provisions that were negotiated this week. The US Trade Representative deferred comment to the White House, which didn’t immediately share any details about agriculture purchases.

Had Mexico not satisfied Trump, the US was prepared to move forward with 5 percent tariffs on Monday against all Mexican imports, roughly $350 billion of goods, with the duties escalating 5 percentage points each month until reaching 25 percent in October. If carried out, it would have been the single largest tariff imposition of the Trump administration, larger than his steel and aluminum tariffs and larger than all the tariffs imposed to date against China.

Businesses and economists warned that tariffs of that scale – which would have been assessed on US importers – would potentially tip Mexico’s economy into recession, while slowing the US economy. They would raise prices on imported goods and disrupt the North American automobile industry.

Although tariffs were averted, many businesses and lawmakers were rattled by the president’s use of a sweeping trade threat to force an ally to make concessions in an unrelated policy area after the two countries and Canada had recently struck a trade deal.

“We remain deeply concerned about using the threat or imposition of tariffs to press policy changes with our neighbors and allies,” said the Business Roundtable, which represents the chief executives of most major US businesses.

The tactics could also cause other countries to think twice before making deals with the US, if such deals can swiftly be followed with the threat of tariffs, said Jorge Guajardo, senior director at McLarty Associates and formerly Mexico’s ambassador to China.

“No matter what the situation, you will be facing tariffs from the US, so you might as well not make any concessions,” he said.


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