• U.S. business lobbying group calling on President Donald Trump to back down on Mexican tariffs.
  • USD/MXN + 2.39% at time of writing.

Reuters has reported on Mexico’s president and the top U.S. business lobbying group calling on President Donald Trump to back down from a threat to impose punitive tariffs on Mexican imports, in a dispute over migration that could shock Mexico’s economy.

Trump's follow-up Tweet on Friday

“Mexico makes a FORTUNE from the U.S., have for decades, they can easily fix this problem. Time for them to finally do what must be done!”

Key notes from the article:

  • Trump said he will introduce the tariffs on June 10 if Mexico does not halt the flow of illegal immigration, largely from Central America, across the U.S.-Mexican border, battering Mexican financial assets and denting global stocks.
  • The plan would impose a 5% tariff on Mexican imports starting on June 10 and increase monthly, up to 25% on Oct. 1.
  • Such levies would deliver a heavy blow to Mexico’s economy, which is underpinned by exports to the United States of goods from avocados and tequila to televisions and cars made by companies such as Ford Motor Co and Nissan.
  • The influential U.S. Chamber of Commerce business group is looking at ways to challenge Trump’s tariff move against Mexico, including legal options. “We have no choice but to pursue every option available to push back,” Neil Bradley, the group’s executive vice president and chief policy officer, told reporters.
  • Other industry groups also criticized Trump’s threat, saying it would cost American businesses, farmers and consumers who have already been bearing the brunt of the separate, lingering U.S. trade dispute with China. “These proposed tariffs would have devastating consequences on manufacturers in America and on American consumers,” Jay Timmons, president of the National Association of Manufacturers, said in a statement.
  • Auto trade organizations expressed concern a tariff war with Mexico would undermine efforts to win U.S. congressional approval for the new United States-Mexico-Canada Agreement, which is meant to replace the North American Free Trade Agreement.
  • Pledging to exercise “great prudence” in seeking a resolution to the tariff dispute, the Mexican president said he did not want to involve the World Trade Organization for now.
  • In a letter responding to Trump’s announcement on Thursday, Lopez Obrador called Trump’s America First policy “a fallacy” and accused him of turning the United States into a “ghetto” that stigmatized and mistreated migrants.

Market reactions

Mexico’s main stock index was down 1.3% on Friday after opening the session sharply lower, and the peso currency was down more than 2.5% against the dollar.

USD/MXN + 2.39% at time of writing.