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Trump calls off Mexican import tariffs threat; what that means for WNY

WASHINGTON – President Trump late Friday called off his threat to impose tariffs on Mexican imports after announcing the United States had reached a deal with Mexico over the southern border.

Trump, in a brief post to Twitter, said the tariffs were “indefinitely suspended” after the U.S. reached a deal he said would “reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States.”

“Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border,” Trump tweeted.

Concern over the threatened tariffs – scheduled to take effect Monday if the two countries had not reached a deal – had rippled through some Western New York businesses and farms in recent days as negotiations between the two countries neared Trump’s deadline.

A Buffalo machine manufacturer said a potential deal with a Mexican company was on hold as it awaited word on the tariffs. Area dairy farmers also expressed concern that they would be impacted by a potential trade war with Mexico.

Jim Phillips, president and CEO of the CAN/AM Border Trade Alliance, said he understood why Trump used tariffs to pressure Mexico into helping stem the tide of undocumented immigrants traversing its territory on the way from Central America to the United States.

“It’s a very focused tariff that is there for a particular reason, and it can be solved,” Phillips said prior to Trump’s announcement late Friday.

The pressure tactic appeared to work, given that Mexico agreed to bolster its border efforts earlier in the week, he noted.

The announcement by Trump that the two countries had reached an agreement ended days of tense negotiations over the potential tariffs. Few details of the deal with Mexico were available late Friday.

A limited trade relationship

Some local trade experts seemed less concerned about Trump’s latest tariff threat than they were about his earlier taxes on imported metals and Chinese products, and there’s an obvious reason why.

Mexico is not a central player in New York’s economy. The state imported nearly five times more goods and services from Canada than it did from Mexico last year, according to Census Bureau statistics. And New York exported nearly four times more in goods and services to Canada than to Mexico.

Those numbers show why no one expected the Mexico tariffs to affect New York the way they would have impacted Texas, where the economy is 295 times more dependent on Mexican imports than New York, according to the U.S. Department of Commerce.

Other numbers show how damaging a U.S-Mexico trade war would have been to industries that are integral to the Western New York economy and its consumers.

Metro Buffalo remains home to two major auto plants — and the U.S. imports more auto parts from Mexico than any other country.

Meanwhile, the U.S. dairy industry’s main export market is just south of the border. And of course, if tariffs had increased as Trump had promised, the cost of Mexican imports – be it a Chevrolet Cruze or a Corona beer – would have likely gone up, too.

For those reasons and others, many business leaders objected to Trump’s proposal.

“It creates uncertainty, which is bad for business and bad for consumers all around,” Dottie Gallagher, president of the Buffalo Niagara Partnership, the regional chamber of commerce, said prior to Trump's announcement that a deal had been struck.

Manufacturers nervous

Automakers and other manufacturers were especially concerned about a tax on products brought in from Mexico. That’s because the North American Free Trade Agreement remade the way many products are made.

“We’ve talked about things going across the border 10 times before they’re completed,” said Craig W. Turner, president of World Trade Center Buffalo Niagara.

General Motors has seven models that are assembled in Mexico, and Ford has two, so tariffs could have forced those companies to raise prices. That could have reduced auto sales and the automakers’ profitability — which, of course, could have hurt the GM and Ford manufacturing plants in Western New York.

“The auto sector — and the 10 million American jobs it supports — relies upon the North American supply chain and cross-border commerce to remain globally competitive,” said David Schwietert, interim CEO and president of the Alliance of Automobile Manufacturers.

Even the threat of tariffs this week had already put some auto-related business deals on hold. Eastman Machine Co., a Buffalo-based maker of cutting machines for industrial fabrics, has been in talks with a Mexican manufacturer of car seats on a potential deal.

“But now they’re saying: ‘We still want to do it, but let’s just take a break and see what happens,’ ” Eastman’s president and CEO, Robert L. Stevenson, said, prior to the announcement late Friday that the tariffs had been suspended.

Dynabrade, a Clarence-based maker of production power tools, also worried that tariffs would have harmed its business.

“Mixing immigration issues with trade policies is adding additional turmoil fostering anti-American sentiments, which will ultimately damage the Made-in-USA brand, resulting in permanent loss of business,” said Hardy Hamann, Dynabrade’s president.

Farm to table

Trump’s latest tariff threat had also caused concern among Western New York farmers.

Dairy farmers in particular were worried, thinking that if the United States had imposed tariffs on Mexican goods, Mexico would have quickly done the same with any U.S. product heading south across the border.

If that had happened, American-made dairy products would have suddenly become more expensive in Mexico.

“Any disruption in the market makes it bad for our farmers,” said Steve Ammerman, manager of public affairs for the New York Farm Bureau.

Tariffs could have also impacted the price of some less healthy products. That’s why Constellation Brands, the Ontario County-based owner of Corona beer and Casa Noble tequila, had been protesting the proposed tariffs to upstate members of Congress.

Worries in Congress

Only one local lawmaker — Rep. Chris Collins, a Clarence Republican and Trump loyalist — sympathized with the president’s tariff threat.

“There is a crisis at our southern border and the president has repeatedly tried to combat the thousands of illegals from entering into the United States,” Collins said in a statement. “Mexico needs to take action as well to control the northward migration coming from Central America.”

Collins’ Republican colleague from the Southern Tier, Rep. Tom Reed of Corning, offered a far different take on Trump’s strategy.

“To say that tariffs per se are going to fix the broken border is not realistic,” Reed said.

Reed is a strong backer of the U.S.-Mexico-Canada Agreement, the trade deal Trump struck to replace the North American Free Trade Agreement. And the Alliance of Automobile Manufacturers and others have warned that the tariffs could have derailed that trade deal.

Rep. Brian Higgins, a Buffalo Democrat, said Trump should have dealt with trade and immigration separately.

Tariffs don’t really attack the problem at the border, he said. Instead, “it’s really attacking the American consumer,” Higgins said.

The New York Times wire service contributed to this report.

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