Mexico tariffs draw sharp response from auto industry, business groups

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A cargo truck near the US-Mexico border in Tijuana, Baja California state, Mexico (GUILLERMO ARIAS/AFP/Getty Images)

President Donald Trump’s latest announcement of increased tariffs on all goods imported from Mexico has quickly encountered pushback from a variety of business and manufacturing interests on both sides of the border — and continued lobbying in Washington, where trade has been a fraught issue in the last few years.

The president announced on May 30 a 5 percent tariff on all goods imported from Mexico, effective June 10, adding that the tariff will increase every month until the migration crisis at the southern border is resolved. The Trump administration hopes that increased pressure will force the Mexican government to stop the flow of Central American asylum-seekers into the U.S.

However, business groups including the U.S. Chamber of Commerce were quick to decry the proposal, citing potential costs for American consumers and businesses. The U.S. imported roughly $346.5 billion of goods from Mexico in 2018.

Trump’s proclamation came just thirteen days after his administration declined to impose a long-discussed 25 percent tariff on automobile parts and revoked tariffs on aluminum and steel from Canada and Mexico that had been in place since 2018. Both those measures had been the subject of significant lobbying efforts, with General Motors — which manufactures several of its models in Mexico — spending $3.8 million on lobbying in the first quarter of 2019, on pace to double its 2018 lobbying expenditures. Though the latest proposed tariffs do not directly target car companies, the automobile industry will likely face the greatest impact. Vehicles were the top category for U.S. imports from Mexico in 2018, with a value of $93 billion.

Mexico has also become the United States’ second-largest foreign supplier of oil this year, and political turmoil in Venezuela combined with reduced production in Saudi Arabia leave American oil companies with few alternatives for heavy crude. Corporations including ExxonMobil, BP and Shell have all lobbied Congress on tariffs this year.

Business groups from other industries have also poured their money into lobbying as the Trump administration’s rhetoric on trade has escalated. More than 1,000 clients have already lobbied the federal government on trade this year, after a record year in 2018 when 1,298 groups lobbied on the issue. A focal point of trade-related lobbying has been the ratification a renewed North American trade agreement, commonly known as the United States-Mexico-Canada Agreement (USMCA). However, momentum for the USMCA’s passage has stalled in recent months, and both lawmakers and industry leaders have expressed concern that additional tariffs on Mexico would further jeopardize the deal.

“If the president goes through with this, I’m afraid progress to get this trade agreement across the finish line will be stifled,” said Senator Joni Ernst (R-Iowa) in a statement on Friday.

While the recently eliminated tariffs on aluminum and steel were authorized under Section 232 of the Trade Expansion Act of 1962, the proposed five percent tariff on Mexican goods is based on the International Emergency Economic Powers Act, which dictates that, in a time of national emergency, the president has the power to regulate commerce. The Washington Post reported Monday night that GOP lawmakers had discussed the possibility of blocking the tariffs, but, to do so, Congress would need a veto-proof majority — something it was not able to obtain when Trump declared a national emergency in February.

Several trade-related bills have been introduced this legislative session, including the Bicameral Congressional Trade Authority Act of 2019 (S.287), which would establish permanent measures to regulate the president’s power to unilaterally impose tariffs under Section 232. Groups including the U.S. Chamber of Commerce, Honda Motor Co. and Americans for Prosperity lobbied on the bill, but, despite bipartisan sponsorship, it has not left committee.

Some groups have also taken the battle over tariffs to the court of public opinion. The Consumer Technology Association, a group representing more than 2,000 technology companies, ran anti-tariff ads on Facebook in the two days after Trump’s announcement. The Koch brothers-affiliated Freedom Partners PAC has continued to run anti-tariff ads on the Facebook page “Trade Builds America,” and the Pass USMCA Coalition, a group of trade associations and corporations, is still running ads in favor of the USMCA’s passage.

The Texas Democratic Party has also made the new tariffs a campaign issue, with a Facebook ad calling the policy a “$17 billion tax.”

The Association of Global Automakers, Inc. (AGA), whose leadership includes longtime Mitch McConnell staffer Don Stewart, spent nearly $600,000 on lobbying in the first quarter of 2019. An AGA ad campaign launched in April includes four, 15-second digital ads and a 30-second broadcast spot which showcase “everyday Americans” end with the message “tell Washington to stop the auto tariffs.”

The most recent Mexico tariffs have not been mentioned by advertisements on the Trump campaign’s social media pages, though the campaign has capitalized on the administration’s ongoing trade war with China. Several current Facebook ads highlight the president’s record of “standing up to China’s unfair trade policies.” Trump recently raised tariffs on Chinese consumer goods to 25 percent.

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