02:29 - Source: CNN Business
Trump threatens new tariffs on Mexican imports
Washington CNN —  

President Donald Trump sabotaged his so-called top priority, the renegotiated NAFTA, on two different fronts Thursday night. First, by angering key House Democrats with his sudden decision to start a procedural 30-day clock on the deal, in a ploy to place pressure on House Speaker Nancy Pelosi.

Second, by announcing he would impose escalating tariffs on June 10 (starting at 5% and working up to 25% in October) on all goods imported from Mexico. The White House’s legal justification will likely face challenges in the courts.

Democrats are mad:

Democratic lawmakers and aides were furious with the decision to move ahead with the draft statement of administrative action, because Pelosi had urged US Trade Representative Robert Lighthizer not to move ahead until the White House had worked out differences with House Democrats. One Democratic aide told CNN it could hurt negotiations with the Hill. Pelosi had been expected to finalize members of four working groups who would negotiate on the legislative text of the bill by Friday. Those talks will now be more strained because the administration has put a 30-day time limit on them: at the end of the month, Trump will be able to move forward with a bill. He could take longer, though the administration has been clear they want the USMCA passed before the end of the year. Here’s our story on the decision, and Pelosi’s response.

Virginia Democrat Rep. Don Beyer, who is generally pro-trade and has opposed Trump’s tariffs in the past, questioned the moves in a tweet Thursday night:

New tariffs deeply endanger the trade deal’s chances in Mexico:

The timing on this is key: Mexican President Andres Manuel Lopez Obrador, known by his initials AMLO, had just on Thursday asked the Mexican Senate to convene a special session before their planned session in September in order to approve the USMCA. Mexico has already passed a new labor reform law to comply with the deal. And now there’s a chance that even if they decide to approve it — a difficult lift under current circumstances — all goods from the country could still face a 25% tariff in the US.

NAFTA largely got rid of existing tariffs between the three countries, and the USMCA is much of the same. Legislators will be hard-pressed to ratify a supposed free trade deal when Trump hasn’t given many specifics on what will be required, other than somehow stopping all illegal immigration, to lift the new tariffs. Officials in Mexico are still trying to avoid this outcome. In a letter Thursday night, AMLO urged Trump to reconsider. “Remember that I don’t lack courage, that I am not a coward nor am I afraid to act on my principles: I believe in a politic that, among other things, invents ways to avoid confrontation and war,” he wrote.

Republicans have been deferential to Trump in his trade war with China, but this is completely different —Mexico is one of our closest trading partners, and Republicans overwhelmingly support free trade with the country.

Republicans are worried, but it’s unclear if this will spur action to prevent Trump from moving ahead with the tariffs:

Senate Finance Committee Chair Chuck Grassley slammed the decision as a misuse of tariff authority on Thursday night, warning it could derail the trade deal.

“I support nearly every one of President Trump’s immigration policies, but this is not one of them,” Grassley said in a statement. Others have followed Grassley’s stance. Lindsey Graham, however, endorsed the move in a tweet Thursday night.

The dynamic here is a challenging one for Republicans. Trump is invoking these tariffs in the name of border security, something GOP lawmakers prefer to side with him on. In condemning the tariffs, Republicans have to walk a political tightrope. Take Iowa Sen. Joni Ernst’s statement, for example: “While I support the need for comprehensive border security and a permanent fix to illegal immigration, this isn’t the right path forward. I’m asking the president to reconsider, and for Democrats to work with us to find a solution to the humanitarian crisis at our southern border.”

What about Mitch McConnell?

The Senate majority leader is also walking a tightrope, pointing the finger at Democrats but also not taking a strong position on the tariff plan.

“There is a serious humanitarian crisis at our southern border, and it is past time for my Democratic colleagues to finally get serious about meaningful action. As our third biggest trading partner, a healthy and vibrant economic relationship with Mexico is a vital source of our joint prosperity,” he said in a statement.

“Any proposal that impacts this relationship deserves serious examination and I look forward to discussing this plan in greater detail with my colleagues and the administration.”

The White House’s line:

White House press secretary Sarah Sanders dismissed any legal concerns with the President’s tariffs announcement.

Asked by CNN’s Joe Johns if there are concerns the action will get tied up in court, Sanders said, “Not at all. The President has the legal authority to do this through IEEPA. In fact, that gives him much broader authority than he’s taken on this front.”

IEEPA is the International Emergency Economic Powers Act, which authorizes the President to regulate commerce after declaring a national emergency.

She continued, “This is a measured response to the authority that he has, there’s case law that supports it from precedent where this has been done in the past. And again, the President’s going to fulfill his duty, it would be nice if Congress would fulfill theirs.”

However, as Kaitlan Collins reported yesterday, privately, officials have conceded it’s not clear the White House has the legal authority to impose tariffs on this scale. They are concerned that, because of the scope, the mandate will potentially face legal challenges that could leave it tied up in the courts before June 10 even gets here.

The bottom line:

After Trump removed tariffs on Canadian and Mexican steel and aluminum a couple of weeks ago, some trade experts and lawmakers had hoped he was becoming more conciliatory and focused in his trade policy. They said that maybe – just maybe – he would prioritize his trade negotiations with China and avoid other fights as he worked to ensure ratification of the USMCA. After Thursday, it is clear that isn’t the case. Trump shot his trade team in the foot over a largely unrelated issue, and it could completely derail the deal. His decision to anger Democrats by starting the clock is at least recoverable —negotiations could go well over the next 30 days, however unlikely it may seem. But ratifying the deal just became much more difficult overall.

CNN’s Joe Johns and Kaitlan Collins contributed to this report.