Mexico tariffs: What could happen if a deal isn’t reached by Monday

In an effort to force Mexico to patrol the border more aggressively to limit the number of immigrants coming into the United States, President Donald Trump threatened to place tariffs on products America imports from Mexico.

If Trump and Mexican officials do not reach an agreement, a 5 percent tariff on all Mexican goods will go into effect Monday, with a gradual increase every month until the tax reaches 25 percent in October. The tariff will stay at 25 percent until Mexico lowers the flow of immigrants into the United States, Trump says.

U.S.-Mexico relations have been tense for a while now. But in a monthly report released the same day as Trump’s tariff threat to Mexico, May was shown to be the third month in a row that more than 100,000 immigrants were stopped at the border and taken into custody. Trump could be trying to use tariffs to pressure Mexico into altering its border procedures.

» READ MORE: Number of immigrants living in the U.S. reaches record 44.4 million

Mexico appears to be receptive to finding a solution. Although Vice President Mike Pence has been leading negotiations, Trump has the final say on whether to end the talks.

Mexico has reportedly pledged to send 6,000 of its national guard troops to the area of the country’s border with Guatemala, among other ideas. However, Mexican officials have made it clear they would rescind their offers if Trump puts the proposed tariffs into effect, saying the economic repercussions of the taxes would make it impossible to enhance their border enforcement.

Friday afternoon, Trump said in a tweet that Mexico may be able to avoid the tariffs if they buy American farm goods at “very high levels,” and there was a “good chance” of a deal. So, Trump may be willing to sideline aggressive border wall procedures in favor of exporting a large amount of agricultural products to Mexico.

Mexico supplies Americans with a large number of everyday products, such as cars, tech equipment, produce and more. These products would likely see considerable price increases under October’s 25 percent tariff.

Because many of these goods are essential and imports can’t be avoided entirely, the tariffs would be paid by U.S. importers and then likely passed on to consumers.

Although Trump says the tariffs would force businesses to move back into the country, experts say they would hurt the U.S. economy and citizens.

A tariff on goods from the United States’ largest trading partner would “cause significant cost increases and other harms to the economy,” according to a report by the Perryman Group, an economic-analysis firm based in Texas. The report found that the tariffs could result in more than 400,000 lost jobs, as well as a loss to the country’s GDP of $41.5 billion each year.

Opponents of Trump’s tariffs — some in his own party — say the country would take a hit from businesses and farmers paying high taxes for their essential goods and from a downward trend of consumer spending.

In response, Trump told Fox News that Republicans should “love” what he’s doing, and later tweeted, “The higher the Tariffs go, the higher the number of companies that will move back to the USA!”

Although the firm estimated that these tariffs would hit Texas the hardest, other states far from the border — including Pennsylvania and New Jersey — would be impacted.

Increased taxes on imported goods would hit hard in high-import states like Michigan and California. Pennsylvania is in the middle of the pack in projected impact, as the state imports $6.4 billion worth of goods from Mexico each year, according to Commerce Department data. New Jersey brings in $4.4 billion worth of imports from Mexico annually.

Based in Hoboken, N.J., Newell Brands — which produces Rubbermaid products, Sharpie Markers, Crock-pots, and others — has been cited as a company that could see a significant negative impact from the tariffs. When Trump threatened similar tariffs in 2018, Newell responded by beginning to raise prices, though the company has not commented on the latest round of potential tariffs.

Linda Conlin, president of the World Trade Center of Greater Philadelphia, told Philadelphia Magazine in 2017 that a tax on imports from Mexico would greatly affect the Philadelphia area.

“Bottom line is that Mexico is a very important market for the Greater Philadelphia region,” Conlin said. “In terms of exports, they’re what drives our economic growth and creates more jobs here.”