Tariffs on Imports from Mexico will not go into effect

Imports from Mexico will not go into effect

Good news for shippers importing goods from Mexico.  Announced tariffs on imports from Mexico have been postponed indefinitely and will not go into effect.  On Friday, May 7, 2019, “Mexico agreed to step up efforts to stem the flow of Central American migrants after Washington threatened to impose a 5% import tariff on all Mexican goods starting on Monday, [June 10, 2019].” [Reuters]

On May 30, 2019, President Trump announced if Mexico does not stop migration to his satisfaction, he will begin imposing tariffs on imports into the United States from Mexico.  If Mexico’s response is not sufficient, the White House will begin increasing tariffs by 5% each month starting June 10, 2019.  The original announcement added a 5% duty rate occurring on the first of each month from July 1, 2019 through October 1, 2019 reaching an additional 25% duty rate.

According to American Shipper, “The National Customs Brokers and Forwarders Association of America (NCBFAA) President Amy Magnus said brokers were relieved that the two countries reached a deal for the U.S. to indefinitely suspend any tariffs on Mexico, adding that it would have been difficult for brokers and forwarders to respond to any tariffs within such a short time frame.”  The article goes on to state, “In addition to the NCBFAA, the Pacific Coast Council of Customs Brokers and Freight Forwarders Associations (PCC) expressed relief at the news that threatened tariffs are being suspended.” Peter Friedmann, PCC counsel, “views a 90-day time frame as a useful guideline in considering whether Trump might eventually impose tariffs on Mexico, though the U.S. government hasn’t written that as a firm deadline or even a ‘red line,’ he said.”

Furthermore, President Trump tweeted on June 8, 2019, “There is now going to be great cooperation between Mexico & the USA, something that didn’t exist for decades. However, if for some unknown reason there is not, we can always go back to our previous, very profitable position of tariffs, but I don’t believe that will be necessary.” The following schedule lists what the tariffs would be if the USTR decided to fall back on them.

Tariff Schedule

The following ad valerom tariffs were announced on imports from Mexico, including NAFTA qualifying goods.

Why the beef with Mexico ?

President Trump is seeking Mexico’s assistance to block migrants from crossing U.S.-Mexico borders.  Originally, President Trump threatened to shut down the border between Mexico and the United States in April 2019.  This threat was based on the increasing number of migrants coming into the United States illegally, up to 4,200 per day, which would total over 1.5 million migrants per year if migration continues at the same pace.  In response, U.S. Customs and Border Protection started hosting public calls once per week to update the community with facts about the situation.

Can Trump Impose Tariffs Based on this?

Technically, yes, but luckily President Trump has not followed through with his threat.  President Trump invoked the International Emergency Economic Powers Act of 1977 (IEEPA), which authorizes the President to regulate commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States which has a foreign source.  In this case, he considers the migration issue to be just that.  No other president in the past has invoked the IEEPA to impose tariffs, only to freeze or block assets of foreign governments or nationals.  In fact, Daniel Ujczo with Dickinson Wright, states “The emergency may be terminated by the President, by a privileged joint resolution of Congress, or automatically if the President does not publish in the Federal Register and transmit to Congress a notice stating that such emergency is to continue in effect after such anniversary.  However, to date, Congress has never attempted to terminate a national emergency invoked by any President.  Read more about IEEPA considerations and the next steps.

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