POLITICS

Trump's Threatened Mexican Tariffs A 'Molotov Cocktail,' Warns Manufacturers Group

Pain caused by the trade war Trump started with China already is landing hardest on his voters.

The head of a U.S. manufacturers association called President Donald Trump’s plan to impose new tariffs on Mexico an explosive “Molotov cocktail” policy.

“Intertwining difficult trade, tariff and immigration issues creates a Molotov cocktail” policy that would have “devastating consequences on manufacturers in America,” warned Jay Timmons, president and chief executive officer of the National Association of Manufacturers.

Trump threatened via tweet on Thursday to impose the tariffs not for business reasons but to force Mexico to stop people from entering the U.S. illegally. Tariffs would start at 5% on June 10 and gradually ramp up to 25% in October, he tweeted.

The threat of a “second front” in Trump’s trade war on top of ramped-up tensions with China sent the stock market spiraling downward.

Trump raised the Mexico tariff issue even as Republicans were pressing to pass the U.S.-Mexico-Canada Agreement, which the administration negotiated to make revisions to 1994′s North American Free Trade Agreement. The revised accord may be in jeopardy now.

The U.S. Chamber of Commerce is considering a legal challenge to the threatened new tariffs.

Despite mounting concerns, Trump doesn’t seem to be changing his mind. He gushed in a tweet Saturday that “tariff is a beautiful word indeed!”

Trump’s tariffs are falling heaviest on farmers and working-class Americans in manufacturing jobs. They’re the same people who helped put him over the top — just barely — in the presidential election.

An analysis last month by Deutsche Bank of the economic pain caused by tariffs Trump already has imposed found that of the top 10 states most affected, all but two of them, Washington and Oregon, voted for Trump in 2016.

The federal government is already spending a total of $28 billion in subsidies to help farmers weather a trade war of Trump’s own making. The threatened Mexican tariffs would hit autoworkers hard ― Mexico is the largest source of parts for U.S.-made cars.

A trade war with Mexico would also add even more pain to what farmers are already experiencing. Mexico, which would likely exact retaliatory tariffs if Trump goes forward with his plan, is the No. 1 export market for U.S. dairy products.

“I don’t think people really understand what is at stake,” Alex Camera, CEO of privately held Seattle business Audio Control, told Forbes early last month about the hike in tariffs on Chinese goods.

“Trump says China is paying these tariffs, but they are not. I am. U.S. companies are paying it at the port.”

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