If the United States imposes tariffs on Mexican goods next Monday as President Donald Trump has proposed, Washington exporters might hold their breath to see if Mexico retaliates or Congress takes action to counteract them.
Certain consumers might see the impacts sooner with an increase in the price of motor vehicles, which are one of the largest categories of imports from Mexico, or other commodities.
But the effects are hard to predict now as Trump talks about imposing a 5% tariff – and raise it by 5 percentage points a month – if the Mexican government doesn’t agree to steps to control the flow of Central American refugees reaching the U.S. border.
Vice President Mike Pence was quoted Thursday by the Associated Press as saying he was encouraged by the latest Mexican proposals but added that the 5% tariffs are still scheduled to be imposed Monday and go up “if we don’t see the results we need to see.”
The talks will continue, and Mexico “may not do anything until the talks don’t go anywhere,” said Robert Hamilton, governor’s adviser on trade policy in the state Commerce Department.
“The Mexican government’s response has been restrained,” Hamilton said. “But at some point, they are going to have to retaliate.”
Mexico is a major trading partner for Washington, with more than $2.1 billion in goods and commodities from the state sold to Mexico in 2018, federal trade data shows. That’s up by about $100 million from 2017, despite tariffs on steel and aluminum imposed by the United States in early 2018 and retaliatory tariffs from Mexico.
But the data show that while some commodities and products – particularly fuel, some types of electric machinery and aircraft – saw an increase, other exports saw sharp drops. Among those hard hit were industrial machinery and computers, dairy and egg products, paperboard and pulp.
The United States imported about $346 billion in products from Mexico last year, Hamilton said, although most of that came through either California or Texas. About $783 million in commodities and goods came through Washington ports, and the largest share of that was cars and other motor vehicles.
Because Washington is so dependent on trade – estimates say it accounts for as much as 40% of all jobs when agricultural operations are factored in – it’s not surprising Trump’s latest round of tariff proposals as a way to control immigration aren’t well received by the state’s congressional delegation.
Sen. Patty Murray, the Democrat who is the senior member of the Washington delegation, called the proposed tariffs “outrageous” and “a dramatic step in the wrong direction.”
“President Trump is determined to fund his shameful immigration agenda on the backs of our state’s growers, workers and families,” she said in an email. “This completely unnecessary escalation – with virtually no support from Democrats or Republicans in the Senate – is clearly a demonstration why Congress needs to reassess its role in executing our nation’s trade policies to rein in this president’s worst impulses.”
Her seatmate, Sen. Maria Cantwell, also was critical.
“New tariffs will make consumer goods more expensive and are not the answer,” Cantwell said in an email. “Stemming the tide of migration from Central America will take cooperation to stabilize the region and improve security.”
Rep. Cathy McMorris Rodgers, the delegation’s most senior Republican member, has never supported tariffs, her spokesman said.
“She doesn’t think they are the right approach. Trade agreements are the way to do it,” said Jared Powell, her spokesman.
The United States has a pending trade agreement with Mexico and Canada, which would replace the North American Free Trade Agreement. The goal is to get that agreement confirmed in the House by August, although members of Congress haven’t seen the final language yet, Powell said.
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