The U.S. President, Donald Trump, is expected to impose a 5% tariff on all Mexican imports by June 10. Mexico launched a counteroffensive against the threat of U.S. tariffs on June 3, with officials warning that it would hurt the consumers and economies of both countries. The tariff threat comes just as the U.S. administration has been pushing for passage of the United States-Mexico-Canada Agreement, which would update the North American Free Trade Agreement (NAFTA). Trump claims Mexico needs to do more to solve the immigration issues on their shared border.

Victor Villalobos, Mexican Secretary of Agriculture, said agricultural trade between both countries was worth about US$130 million a day in 2018 and a 5% U.S. tariff would decrease the figure by US$3.8 million a day. The hike in tariffs is also expected to be detrimental to the automotive sector. The U.S. could increase the import tax by 5% each month through October, or until Mexico halts the migrants coming across the southern border. According to Goldman Sachs, Mexico was the second largest supplier of goods to the U.S. in 2018, with imports totalling US$352 billion.

A study by economic research firm Perryman Group, based in the U.S. state of Texas, says a 5% tariff on Mexican goods could cost the U.S. more than 400,000 jobs, particularly in the retail trade and manufacturing.

Source: CNBC