President Trump on Wednesday called on Mexico to “step up” to prevent looming tariffs, remarks that come as one top White House trade advisor suggested the planned duties on the country may not take effect on Monday as scheduled.
“If they don’t, tariffs will go on and if they go high, the companies are going to move back into the United States,” Trump said during a press conference with Ireland’s prime minister. “It’s very simple. The people are going to have to worry about paying the tax because the companies are going to move back into the United States, there won’t be any tariffs.”
The U.S. is poised to impose 5 percent tariffs on shipments from Mexico on Monday. Those duties would rise to up to 25 percent in October if the country does not address Trump’s demands to curb illegal crossings into the U.S., though it’s unclear exactly what steps the administration is seeking.
As the deadline looms, White House officials and lawmakers were racing to find a solution with Mexican officials.
Vice President Mike Pence, Secretary of State Mike Pompeo and United States Trade Representative Robert Lighthizer were all expected to meet on Wednesday with Marcelo Ebrard, Mexico’s foreign minister. The country’s top diplomat met on Tuesday with House Speaker Nancy Pelosi, D-Calif., and several other Democrats from the chamber.
The threat of higher import costs, however, may have forced Mexico to take more concrete steps to block undocumented individuals from traversing the border, according to White House trade advisor Peter Navarro.
“We believe that these tariffs may not have to go into effect precisely because we have the Mexicans' attention," he told CNN. "Let’s stay calm and look at the chess board here."
Navarro's comments come after Trump on Tuesday said the duties were "likely" to take effect.
The potential new tariffs have earned widespread criticism from economists, industry groups and even Senate Republicans, who are considering taking action to disapprove of the duties should they be implemented.
It also led to a sell-off in Wall Street trading on Monday, though the markets have largely stabilized and were on the rise on Wednesday amid the positive trade talks and comments from Federal Reserve Chairman Jerome Powell that suggested an interest rate cut was possible in 2019.
As one of the largest U.S. trading partners, any new tariffs on Mexico would likely lead to higher production costs for retailers, auto manufacturers and others, leading to potentially increased prices for the consumer.
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Toyota Motor Corp., for example, told dealerships on Tuesday that the duties could cost its suppliers up to $1 billion if they were extended to 25 percent, according to a source with knowledge of the communication.
The U.S. auto industry imported nearly 2.8 million vehicles from Mexico in 2018. Future shipments would all be subject to the new 5 percent tariff were it to take effect.
Among the manufacturers most impacted is General Motors, which imported over 725,000 light vehicles from the country last year.
Amid an escalating trade dispute with Mexico, the White House is pushing Congress to approve a new trade deal between the two countries and Canada that would replace the existing North American Free Trade Agreement.
The imposition of new tariffs, experts say, would further complicate the approval process for the United States-Mexico-Canada Agreement.