Trump threatens up to 100% tariffs on Mexico over immigration

Former president Donald Trump on Monday threatened tariffs as high as 100% on Mexico, America’s largest trading partner last year, in yet another escalation of the drastic protectionist promises of his 2024 presidential campaign.

Speaking in Raleigh, North Carolina, a day before Election Day, Trump said he would impose tariffs on Mexico of between 25% and 100% until it closed off its border with the United States. Trump has already suggested new import duties of as high as 20% on every country in the world, and economists have warned that if enacted, his sweeping new trade proposals are likely to send costs soaring for U.S. consumers. But the former president has only intensified his proposals to raise tariffs on Mexico, arguing the country is doing too little to stop migration north.

Trump’s latest call, which would amount to a multitrillion-dollar tax on purchasers of Mexican-made goods, reinforces his commitment to impose new tariffs even on U.S. allies. The proposal also includes an irony: As president, Trump negotiated a trade deal with Mexico and Canada that replaced the North American Free Trade Agreement, which he long derided. Even a 25% tariff would undermine the trade deal he signed and invite retaliation from Mexico’s government.

“If they don’t stop this onslaught of criminals and drugs coming into our country, I am going to immediately impose a 25% tariff on everything they send into the United States of America,” Trump said in Raleigh. “You’re the first ones I’ve told it to.”

Trump later added that the tariff “has a 100% chance of working” because he could dramatically escalate it if it proved ineffective.

“If that doesn’t work, I’ll make it 50, and if that doesn’t work, I’ll make it 75,” he said. “Then I’ll make it 100.”

In his first term, Trump imposed tariffs primarily on more than $300 billion in goods from China. These duties have largely been kept in place by the Biden administration. During this presidential campaign, however, Trump has even more dramatically touted the benefits of tariffs - at times calling them “the greatest thing ever invented” and “the most beautiful word in the dictionary” - while dismissing claims from both Republicans and Democrats that they would be paid for by Americans.

A trade war with Mexico alone could significantly raise prices for American consumers, economists say. The United States imported $476 billion from Mexico last year, more than any other country, according to Kim Clausing, who served in the Biden administration’s Treasury Department and is now senior fellow at the Peterson Institute for International Economics, a Washington-based think tank. Currently, the United States has very few import duties on Mexico. (Canada and China are America’s next two largest trading partners.)

A 25% tariff on those imports would translate into a roughly $100 billion annual tax - and more than $1 trillion over the next decade. (A 100% tariff would probably raise more money, but not four times as much as a 25% tariff, because the volume of trade between the countries would decrease.) Trump insists that foreign countries pay for tariffs, because typically importers or manufacturers pay them to U.S. Customs and Border Protection, but most economists say businesses tend to raise prices to cover the costs.

Economists also point out that tariffs on all Mexican imports would drive up the cost of food, in particular. In 2022, Mexico supplied 51% of U.S. fresh fruit imports, according to the Agriculture Department. Mexico exported $2.7 billion worth of avocados alone last year to the U.S.

“It seems contrary to Trump’s own free trade agreement with our North American partners to levy exceptionally high tariffs on Mexican imports, when the purported goal of the free trade agreement is free trade,” Clausing said.

The Trump campaign did not immediately respond to a request for clarification on how Trump would consider the border closed. The campaign pointed to a prior statement from Brian Hughes, a Trump senior adviser, stating: “Trump policies will fuel growth, drive down inflation, inspire American manufacturing, all while protecting the working men and women of our nation from lopsided policies tilted in favor of other countries.”

Earlier in the campaign, Trump had suggested new tariffs on Mexico as a response to concerns that China is building auto plants in Mexico as a back door to U.S. markets. These fears have been bipartisan: White House National Economic Council Director Lael Brainard also voiced concern in Detroit this September about foreign “entities of concern” infiltrating North American auto supply chains.

But Trump’s call on Monday to use tariffs to stem migration reflects how he has characterized them not just as an instrument of economic policy but also to accomplish unrelated foreign policy goals. Trump has said he will use tariffs to end foreign wars, for instance, while also saying they could fund national child-care programs and pay down the federal debt.

Economists have largely warned these plans could prove disastrous for the global and U.S. economies. Tariffs can encourage some domestic production, but only by making it so much more expensive for Americans to buy imports that firms relocate here. The investment bank UBS has projected the stock market could contract by more than 10% from Trump’s tariff plans, while the Peterson Institute has projected they could cost the typical household more than $2,600 per year.

“This could easily be a $1 trillion tax over the next decade, paid for by the American people,” said Jason Furman, who served as a senior economist in the Obama administration, of the proposed 25% tariffs on Mexico. “I’m not sure if it’s worse for the economy or America’s geopolitical standing. But both would be terrible.”