Trump threatens Tequila tariffs over illegal immigration

US president Donald Trump plans to impose a 5% tariff on all imported goods from Mexico – including Tequila and mezcal – in response to the “illegal migration crisis” at the US-Mexico border.

US president Donald Trump took to Twitter to announce the proposed tariffs on Mexican imports

In a statement posted on the White House website, Trump announced he was “invoking the authorities granted to me by the International Emergency Economic Powers Act” in order to “address the emergency at the southern border”.

From 10 June, all goods imported to the US from Mexico will face a 5% tariff.

The statement explained: “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.

“If the crisis persists, however, the tariffs will be raised to 10% on July 1, 2019.”

Trump continued to explain that if Mexico “still has not taken action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States”, the tariffs will be increased to 15% on 1 August.

Furthermore, if the US is still not satisfied that Mexico has taken the action it requests by 1 September, the tariffs will be increased further to 20%.

If the situation remains the same by 1 October, the tariffs will be raised to 25%.

“Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory,” the president continued in his statement. “Workers who come to our country through the legal admissions process, including those working on farms, ranches, and in other businesses will be allowed easy passage.

“If Mexico fails to act, tariffs will remain at the high level, and companies located in Mexico may start moving back to the United States to make their products and goods. Companies that relocate to the United States will not pay the tariffs or be affected in any way.”

He concluded: “As president of the United States, my highest duty is the defence of the country and its citizens. A nation without borders is not a nation at all. I will not stand by and allow our sovereignty to be eroded, our laws to be trampled, or our borders to be disrespected anymore.”

Global disputes

Just yesterday (30 May), trade bodies in the US called for the removal of EU spirits from proposed retaliatory tariffs from the States in response to an ongoing dispute with the World Trade Organization (WTO).

Trump ignited several trade wars last year after introducing 25% and 10% tariffs on steel and aluminium imports respectively from 1 June 2018.

Mexico levied a 25% tariff on American whiskey exports in response, which were valued at US$13.4 million in 2017.

The EU hit back with retaliatory tariffs on €2.8 billion (US$3.12bn) worth of US products, including American whiskey, in June last year.

Canada also imposed its own tariffs in response to the US, which affected more than 250 US-made products, including American whiskey, which faced a 10% duty hike.

When the US hit China with tariffs on an additional US$34bn worth of Chinese goods, the countries became locked in the “largest trade war” in history. China clapped back with its own tariffs, including a 25% tariff on American whiskey.

Earlier this month, the US said it had come to an agreement with Canada and Mexico to repeal retaliatory tariffs on American whiskey exports to both countries.

American whiskey producers have warned that tariffs could have a significant detrimental affect on the industry if resolutions are not swiftly agreed. Jack Daniel’s maker Brown-Forman estimated that retaliatory tariffs on American whiskey could knock US$125 million off its 2019 financial results.