Yesterday, President Trump announced via Twitter the imposition of new tariffs on Mexico of 5 percent beginning on June 10.  He said he would raise tariffs gradually until Mexico takes a harder line on stopping illegal immigration (see below White House statement).

The tariff increases on imports from Mexico would be as follows unless Mexico does more to crack down on the surge of migrants trying to cross the U.S. border:

  • June 10 – 5% tariffs
  • July 1 – 10% tariffs
  • August – 15% tariffs
  • September – 20% tariffs
  • October 1 – 25% tariffs

In response, Mexico’s President Obrador dispatched his foreign secretary to Washington on emergency travel to try to stop Trump from following through on his threat to impose tariffs on Mexican goods on June 10.

On a sale of “other” sugar at the reference price under the suspension agreements (which has tended to underpin the U.S market for some time), a 20 percent tariff on all imports from Mexico (due September 1) would add 4.6 cents per pound to the market. The 25 percent tariff on October 1 would add 5.75 cents.

Tariffs on Mexico could actually lead to additional high tier sugar imports if the tariffs play out as announced.  Of course, action by USDA to increase the TRQ would offset this possibility.

The expectation is that Trump will at least get some kind of symbolic concession from Mexico, declare victory, and cancel the tariffs.

On the other hand, few expected yesterday’s announcement, which comes just days after the President lifted steel and aluminum tariffs on Mexico and at the same time his administration is pressing Congress to approve a new free trade agreement with Mexico. The current trade conflict with China shows that sometimes a 25 percent tariff is not just a threat.