Trump Mexico Tariff Threat Rattles California

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A threat by President Trump to impose tariffs on goods coming from Mexico has huge implications for California. The Bay Area Council has long advocated against the use of blunt-force tariffs for settling trade and other disputes because businesses and consumers end up paying the cost from higher prices. And a body of research by the Bay Area Council Economic Institute has highlighted the damage that tariffs can cause, both in direct costs and broader, longer-term disruption to supply chains and markets. Mexico is California’s largest trading partner and the $44 billion in goods imported across our southern border made California the third-largest importing state for goods from Mexico. Products range from limes and avocados to auto parts. Trump, in hopes of compelling Mexico to do more to stem the flow of Central American immigrants and asylum seekers traveling through the country to the U.S. border, threatened an initial tranche of tariffs of 5 percent, with possible future increases up to 25 percent. Trump’s China tariffs have brought retaliatory tariffs against U.S. goods and similar action by Mexico would impact $30 billion in goods that the country imports from the Golden State. The new tariff threat also risked derailing current negotiations and approval of the United States-Mexico-Canada Agreement and further clouding our trade relationship with Mexico and Canada.

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