President Trump announced that starting on June 10, the administration will impose a 5 percent tariff on all Mexican imports “until Mexico substantially stops the illegal inflow of aliens coming through its territory.” This tariff would escalate by 5 percent per month to an astonishing 25 percent “permanently” by October 1. This idea is a terrible policy. It will punish U.S. consumers with higher prices, and it could easily result in more illegal immigration.
Tariffs will undermine the Mexican economy and lead to more illegal immigration from Mexico.
Mexico’s exports—$195 billion to the United States—account for 38 percent of its GDP. Imposing a 25 percent tariff would make trade with Mexico unprofitable. For context, the U.S. currently has a 25 percent tariff on pickup trucks which virtually bans foreign-made pickups, as only 0.23 percent of U.S. pickups are foreign-made. An end to U.S.-Mexico trade would trigger mass layoffs in Mexico—particularly in northern Mexico. Consequentially, the Mexicans that are unemployed due to Trump’s tariffs would look to the United States for work, increasing illegal immigration and exacerbating the very problem Trump aims to ameliorate.
Indeed, President Trump is so focused on stopping immigration from Central America, which has now overtaken Mexican illegal immigration, that he has forgotten that for nearly a century, Mexicans dominated those flows. A 5 percent tariff by itself would be more than double the pre-North American Free Trade Agreement (NAFTA) tariffs, so Trump is effectively terminating NAFTA in less than 2 weeks, which would devastate the Mexican economy. This would undoubtedly cause layoffs and create Mexicans looking for work north of the border again.
While NAFTA initially may have led to more illegal immigration as Mexico’s economy adjusted, its economy has now grown to the point that Mexican immigrant population in the United States has remained flat for almost a decade, and the illegal population from Mexico has fallen by 1.5 million, meaning that more Mexicans are leaving the United States than entering it. If Trump effectively terminates NAFTA with his tariffs, a reversal of these immigration trends is a very real possibility.
The threat of Mexico closing the border will keep illegal immigration from Central America high this summer.
In normal times, illegal immigration slows in June when temperatures reach dangerous levels and falls until February. Indeed, history shows that apprehensions fall 24 percent on average from May to July. But if Central Americans believe that Mexico might suddenly close the Guatemala-Mexico border, they will likely come to the border regardless of the additional risks—undoing the seasonal pattern of illegal immigration.
We know that immigrants react to the threat of border closures. In late 2016, Trump’s election disrupted this seasonal pattern as immigrants rushed to the border to beat his inauguration based on the (unfounded) fear that Trump would end asylum. Then, in October, Trump threatened to “close the border”, but his threat only scared immigrants to migrate before the seemingly imminent border closure. Indeed, 2018 and 2019 are the only two instances in which January apprehensions were higher than the previous May’s numbers since 2003. June 2017 was the first time on record that numbers rose in June. With the more effective transportation network now, it’s entirely possible that Trump could again break these seasonal patterns and keep illegal immigration higher than it would have otherwise been.
Mexico could retaliate on immigration in a big way.
The Mexican government is already helping carry out D.C.’s agenda south of the U.S. border. Since FY 2014, the Mexican government has apprehended 692,476 Central Americans. It has stopped fast-tracking humanitarian visas for Central Americans traveling into Mexico. It is accepting thousands of Central Americans back into its country while they wait for asylum hearings north of the border. It has attempted to set up a migrant “containment” belt with federal forces at the Isthmus of Tehuantepec—the shortest point in Mexico. It is intercepting migrants trying to reach legal U.S. ports of entry. President Trump doesn’t appreciate these efforts, but he would regret it if Mexico loosened its policies to punish him for his tariffs.
The United States is unlikely to receive any major concessions from Mexico.
So far, Mexico has not promised to fulfill any of Trump’s latest demands, and it’s difficult to imagine why they would. Trump keeps moving the goalposts and is demanding that Mexico control not just its own actions with respect to enforcement, but also the actions of Central Americans.
Moreover, Trump has already tried to force Mexico to adopt a “safe third country” agreement that would allow him to boot Central Americans requesting asylum back into Mexico without a hearing. But the internal politics in Mexico will never allow it to allow nearly 500,000 Central Americans to be deported back to its northern cities. Tijuana already experienced major protests last year over homeless Central Americans who the U.S. blocked from crossing. Mexico will not accept a deal where the United States makes Central American migration 100 percent their problem. It will bet, hopefully correctly, that the White House really doesn’t want to end trade with Mexico, just as it didn’t want to “shut down” the border with Mexico earlier this year.