The White House recently announced plans to impose new tariffs on imported goods from Mexico in response to immigration issues effective June 10th.
In a statement posted on Whitehouse.gov, president Trump stated that an initial 5% tariff would be established June 10th.
If the migration crisis is not resolved, the White House goes on to say, the duties will be raised to 10% July 1st; then 15% on August 1st; 20% on September 1st and will culminate in a whopping 25% tariff on imports from Mexico effective October 1st.
According to the president’s latest statement “Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.”
The statement adds: “If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgement, the Tariffs will be removed.”
President Trump invoked the International Emergency Economic Powers Act enacted in 1977, which increases presidential economic powers in response to threats from a foreign source.
It was first implemented by Jimmy Carter in response to the Iran Hostage Crisis and in subsequent crises, including the aftermath of the 9/11 terrorist attacks.
Mexico is the United States’ third largest trading partner and is the second-largest supplier of goods imported in 2018, According to the United States Trade Representative, The U.S. imported $371.9 billion worth of goods in 2018.
As a comparison, 2018 imports from Canada totaled $353.6 billion, and from China, $539.5 billion.
The U.S. trade deficit with Mexico is considerably higher than its deficit with Canada, however, weighing in at $81.5 billion, compared to $19.8 billion with Canada.
What Industries Will Be Affected By Tariffs on Mexico?
The U.S. is a major importer of goods from Mexico, with imports up 10.3% from 2017, and up 60.5% from 2008, according to the USTR. Since the ratification of NAFTA, imports of goods from Mexico rose 768%.
The new tariff proposal stands to have a major impact on the U.S. industrial sector, which is already struggling with tariffs on imports of Chinese goods and materials.
Related: Top 12 U.S. Auto Parts Manufacturers
Topping the list of imports from Mexico related to the industrial sector are vehicles, valued at $93 billion, followed by electrical machinery, valued at $64 billion; machinery ($63 billion); mineral fuels ($16 billion) and optical and medical instruments ($15 billion).
The U.S. auto industry will be heavily impacted by import tariffs, as most U.S. automotive companies such as GM, Ford and Fiat Chrysler all have plants in Mexico and many rely on imported parts and accessories, making them especially vulnerable to tariffs.
A recent article by CNN provided the example of wire harnesses, a critical component of auto production. According to the article, 70% of these crucial components are imported directly from Mexico.
Related: 8 Tips For Sourcing a Wire Harness Assembly Manufacturer
Challenges for Manufacturers
Concerns over tariff action and fears of a trade war have clouded manufacturers’ optimism, even as U.S. manufacturing continues to expand.
Over the past year, prices have spiked in anticipation of greater tariffs and the tariff issue has loomed large among manufacturing executives’ concerns.
According to IndustrySelect’s database of 400,000 U.S. manufacturers, roughly 43,000 manufacturers in the U.S. rely on imports for the production of goods.
Many companies have applied for exemptions to the tariffs. Information on applying for an exemption can be found here.
Others have turned to industrial marketplaces like IndustryNet to locate domestic suppliers of materials and goods.
Finding Domestic Suppliers
IndustryNet maintains up-to-date information on over 400,000 U.S. manufacturers and suppliers of more than 10,000 products and services.
IndustryNet lists suppliers across a range of industries, producing everything from steel and aluminum to air compressors, conveyor belts and printed circuit boards.
Visitors can set up a free user account, build custom lists of potential suppliers, send quote requests, download catalogs, view company photo and video libraries, and more.
IndustryNet is also a direct path for U.S manufacturers to increase their visibility among domestic industrial procurers. Learn more about or marketing solutions.
