Negotiations To Avert Mexico Tariffs Continue In Washington

Jun 6, 2019
Originally published on June 6, 2019 8:17 am
Copyright 2019 NPR. To see more, visit https://www.npr.org.

RACHEL MARTIN, HOST:

There will be more talks between the U.S. and Mexico today over a new rift in that relationship. President Trump continues to insist that unless Mexico stops the flow of migrants over the southern border, he will impose tariffs on all Mexican goods that come in to the United States. The president has threatened to do an end run around Congress, use emergency powers to start taxing Mexican goods at 5%. That could go all the way up to 25%. The Mexican government has said it will retaliate.

Joining me now is William Reinsch. He served as an undersecretary of commerce for President Bill Clinton.

MARTIN: Is this a good negotiating tactic? I mean, using tariffs this way, to try to effect change on immigration policy in Mexico - is it going to get the president what he wants?

WILLIAM REINSCH: Well, it might. It's his standard tactic. You know, it's to always escalate, always press harder. You start by hitting them in the face and hope they fold. You know, maybe they will; maybe they won't. It is, I think, arguably, a misuse of the statute, which was not intended for this purpose, although I think, you know, somebody will sue him if the tariffs actually go into effect.

MARTIN: Which statute?

REINSCH: It's called the International Economic Emergency Powers Act. And it was designed to deal with cases like Iran, North Korea - sanctions cases. It wasn't designed to deal with this. Probably you can use it for this, so I think he'll get away with it. There's a lot of unhappy people. There's going to be a lot of damage done. And it puts two issues together that really don't belong together - you know, trade and the border.

MARTIN: There are a lot of unhappy people, you say, including many Republicans, members of the President's own party. Senator Pat Toomey, a Republican, spoke to All Things Considered last night about his opposition to the threat of these tariffs on Mexico. Let's listen to some of that.

(SOUNDBITE OF ARCHIVED BROADCAST)

PAT TOOMEY: Mexico is one of our biggest trading partners, nearest neighbor, closest ally. And so it would directly diminish the value of the tax reform that we did by raising taxes on consumers. It would disrupt supply chains for American companies, thereby making them less competitive. And so that's the direct, practical economic impact.

MARTIN: Is he right?

REINSCH: Yes, he's right about that. And Mexico, it turns out, as of March, is our biggest trading partner. We import more stuff from Mexico now than even from China. And one-third of it is cars and car parts. So if you're looking for short-term victims, it's the automobile industry. And he's exactly - Senator Toomey is exactly right. If these stick, it's going to force them to alter their supply chains and restructure the way they build cars, which will be expensive for them to do, time-consuming for them to do and will make cars more expensive.

MARTIN: How could you foresee Mexico retaliating? I mean, they have suggested that this could trigger a trade war.

REINSCH: Well, they'll probably - because of domestic politics in Mexico, they probably have to - you know? - if there's no resolution. And they've done it before, you know? When he put in the steel tariffs, they retaliated. Usually, it's on agriculture because that's one of our biggest items exported to them. So they'll probably do that again, which means our farmers take the hit.

MARTIN: Yesterday, several former U.S. ambassadors to Mexico wrote an op-ed urging - saying basically that the tariffs would undermine Mexico's ability to tackle migration, so undercutting the very goal that President Trump wants to achieve. Do you agree with that?

REINSCH: I think that's right. I think it imposes a lot of economic pain on Mexico. It makes things there worse, which doesn't help the situation at the border. It makes the Mexican people much less interested in cooperating with us. One of the things the Mexican government could do, which it has not done yet in the form of retaliation - would be to stop various kinds of cooperation that it has with us that are ongoing. You know, we spent - thanks to NAFTA, we spent 25 years integrating the North American market into one. And it's really - that's really succeeded. And we have supply chains that cut across all three countries. And this kind of thing rips those apart. It's not good for anybody.

MARTIN: Can you see this having long-term effects, long-term damage to the new NAFTA agreement?

REINSCH: Well, yes. There's a political aspect of this as well as an economic aspect. The president has conflated the two issues, migration and trade, so nobody should be surprised if the House and the Senate do the same thing. I think it makes it more difficult to pass USMCA, the new agreement. I mean, members of the Congress have said so. I think it also has a long-term debilitating effect because, basically, it says that America is an unreliable negotiating partner. You know, we negotiate USMCA; the president takes the tariffs away on steel and aluminum. And then two weeks later, he slaps them back on. Why would anybody make a deal with the United States in this situation if you have no confidence that it's going to stick?

MARTIN: William Reinsch served as an undersecretary of commerce under President Bill Clinton. He joined us this morning. Thank you so much for your time, sir.

REINSCH: Thank you. Transcript provided by NPR, Copyright NPR.