President Trump on Thursday said he would impose a 5 percent tariff on all goods entering from Mexico unless it stopped the flow of illegal immigration to the United States, a dramatic escalation of his border threats that could have sweeping implications for both economies.
The White House plans to begin levying the import penalties on June 10 and ratchet the penalties higher if the migrant flow isn’t halted. Trump said he would remove the tariffs only if all illegal migration across the border ceased, though other White House officials said they would be looking only for Mexico to take major action.
After the 5 percent tariffs are imposed on June 10, the White House said it would increase the penalties to 10 percent on July 1 and then an additional 5 percent on the first day of each month for three months. The tariffs would stay at 25 percent “until Mexico substantially stops the illegal inflow of aliens coming through its territory,” a statement by the president said.
The President's statement makes clear that this action is taken pursuant to the International Emergency Economic Powers Act. You can learn all about that statute in a good CRS report here. This is not something I've studied in depth before, but at first glance, it looks like the statute gives the president broad authority, making a court challenge to this action difficult; it also allows Congress to terminate a president's action through a joint resolution, if Congress were so inclined (the reaction from members of Congress today is going to be really interesting).
As for the immigration part, these actions seem like a bad approach to me, but I'm sure my Cato immigration colleagues Alex Nowrasteh and David Bier will have more to say. With regard to trade policy more broadly, Trump is opening another front in his (many) trade wars. Acting White House Chief of Staff Mick Mulvaney seemed to be trying to minimize the prospects of trade damage when he said this: "These are not tariffs as part of a trade dispute. These are tariffs as part of an immigration problem. USMCA is a trade matter and completely separate." But the reality is that these tariffs create a brand new trade dispute, and they will make passage of the USMCA (the renegotiated NAFTA) very difficult in Mexico, with good reason: What exactly is the point of a trade agreement to eliminate tariffs if a trading partner is going to impose tariffs anyway?
Perhaps the overarching trade policy lesson here is simply this: Trump really likes tariffs. It's not a particularly deep lesson, but it's a lesson nonetheless.