What a 20 Percent Tariff on Mexican Imports Means

By Carolina Espinal

Throughout the campaign trail, the Trump administration vowed to build a wall alongside the U.S.-Mexico border. Weeks into his presidency, Trump has issued a litany of executive orders, ranging from impromptu actions regarding immigration, the Keystone XL pipeline, and TPP. Now, discussions to build a wall intensify.

During a speech at the National Palace, Mexican President Enrique Peña Nieto echoed his concern and refuted the notion following President Trump’s claim that Mexico would pay for the border wall. Among the options to pay for the wall is a 20 percent tariff on all goods shipped from Mexico to the U.S.

In 2015, the U.S. imported $303 billion worth of products from Mexico but the distinction between the benefits and damages of a tariff remain debatable as many believe that instituting the tariff will open an immutable burden for American companies and consumers.

However, concerns about U.S. jobs and the prices of the products constitute only a portion of the greater question: who will actually pay for the wall?

In retrospect, experts weighing in believe that the tariff is a consequent way to make American consumers pay for the wall. According to the U.S. Chamber of Commerce, over 6 million U.S. jobs are dependent on trade— jobs that would be jeopardized if trade were restricted.

Imports from Mexico are interconnected with U.S. companies that send parts across the border to be assembled, making a tax on one, a tax on all. The tariff will likely hit companies and retailers like Ford, General Motors and Walmart, consequently making products imported from Mexico more expensive.

However, a tariff on trade is not unprecedented, as seen in 2009 when President Obama used tariffs on Chinese tires. Prices for tires increase, costing more jobs.

Mexico’s economy is greatly influenced by U.S. trade, with over 80 percent of its exports going over the border. A tariff on Mexico would translate to a disadvantage for its economy, as it will discourage American firms from buying their products— U.S. importers bring cars, machinery, medical equipment, mineral fuels, and agricultural products from Mexico.

Ildefonso Guajardo, Mexico’s economy minister, feels wary of the possibility that a Trump tariff will lead to a global recession and said Mexico would be quick to retaliate and attempt to neutralize the measure.

White House press secretary, Sean Spicer, reported possible policy moves like Border-adjustment, a policy long sought by Republicans in the House of Representatives, which would subsidize exports and tax imports.

The shift and contentious war on trade  will cause a ripple effect, most notably, toward producers and consumers as discussion regarding the wall continues.


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