Donald Trump vows to hit Mexico with 5% tariff on all goods – which will keep increasing until illegal migrants stop crossing into US

DONALD Trump has vowed to impose a 5% tariff on all goods imported from Mexico in his latest trade war.

The US President said the tariff would be ratcheted higher every month until illegal migrants stop crossing over the border.

His move marks a dramatic escalation of in his battle to control a tide of illegal migrants that has increased despite his efforts to build a border wall.

The announcement came after Trump revealed border agents has apprehended the “largest group of illegal aliens ever”.

As many as 1,036 people illegally crossed the border in El Paso at around 4am on Wednesday, according to the US President.

Just two hours after revealing this news, Trump announced the new Mexico tariff – which will come into force on June 10.

Trump tweeted: “On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP.

“The Tariff will gradually increase until the Illegal Immigration problem is remedied…at which time the Tariffs will be removed.

Trump said in a statement the tariffs would start at 5% on June 10 and increase monthly until reaching 25% on October 1.

"If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the tariffs will be removed," Trump said.

The announcement rattled investors who feared that worsening trade frictions could hurt the global economy.

The Mexican peso, U.S. stock index futures and Asian stock markets tumbled on the news, including the shares of Japanese automakers who ship cars from Mexico to the United States.

US officials said 80,000 people are being held in custody with an average of 4,500 arriving daily, overwhelming the ability of border patrol officials to handle them.


The president's move was a direct challenge to the Mexican government of President Andres Manuel Lopez Obrador.

It raises the risk of deteriorating economic relations between two neighbours heavily dependent on the cross-border flow of goods.

Trumps directive also spelled the potential for chaos for his efforts to get the US Congress to approve his USMCA trade deal.

He sees this as a replacement to the North American Free Trade Agreement between the United States, Mexico and Canada.

"We're in a good moment building a good relationship (with the United States) and this comes like a cold shower," said Mexico's deputy foreign minister for North America, Jesus Seade.

He said it would be disastrous if Trump goes through with his threat to impose the tariffs.


Calling Trump's move "extreme," Seade said a normal response would be for Mexico to "mirror" the US tariffs but that would lead to a trade war.

Trump said he was acting under the powers granted to him by the International Emergency Economic Powers Act.

He campaigned for election in 2016 on a vow to crack down on illegal immigration and has been frustrated that the flow has increased in recent months.

"Mexico’s passive cooperation in allowing this mass incursion constitutes an emergency and extraordinary threat to the national security and economy of the United States," Trump said in the statement.

"Mexico has very strong immigration laws and could easily halt the illegal flow of migrants, including by returning them to their home countries," he said.

When asked by reporters which products from Mexico could be affected by the tariffs, White House acting chief of staff Mick Mulvaney said: "All of them."

This is an urgent problem," Mulvaney said. "We are interested in seeing the Mexican government act tonight, tomorrow.

Shares in Toyota Motor Corp, Nissan Motor Co and Honda Motor Co all fell around 3% or more, while Mazda Motor Co fell nearly 7%.

All four automakers operate vehicle assembly plants in Mexico.

"The threat of US tariffs on Mexico to take effect inside two weeks is a sharp blow to investor sentiment," said Sean Callow, a senior currency analyst at Westpac.

"Mexico is the US's largest trading partner and a flare-up in trade tensions was definitely not on the market radar."

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